RISING RATE
09/26/2024 |
From 2010 until Covid, the neutral rate, the Fed funds rate that was neither expansionary nor contractionary, was near zero and rarely exceeded 2%. Many expect that going forward, the neutral rate will be systemically higher. The combination of a shrinking labor force, a decline in trade/globalization, increased defense spending, the high cost of decarbonization, rising debt payments, and an aging population may push it to 3.5%.