Economics
Powell's Fed Sees Lower Long-Run Rate Outlook as Growth Dims
- FOMC cuts its estimate of neutral or natural interest rate
- The upshot is lower rates aren’t as stimulative as believed
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Federal Reserve policy makers are discovering they likely need to shift into an even lower gear if they are to speed up the U.S. economy.
Chairman Jerome Powell and colleagues last week estimated that the so-called neutral interest rate -- the level which neither stimulates nor restricts growth -- now sits around 2.5%, down from 2.75% in March and as high as 4% in 2014.