Asks about factors that will break Fed majority given soft labor market and sticky inflation
Host
Robert Kaplan
Market probabilities at 50/50 are correct; Fed close to neutral makes decision high-stakes
Questions where neutral rate sits given different Fed views and implications for debate
Host
Robert Kaplan
Real neutral Fed funds rate is 0.75-1%; adding current inflation of 2.75-3% gives nominal neutral of 3.5-3.75%
Asks why hawkish voices emerging despite shutdown data limitations
Host
Robert Kaplan
Hawkish voices emerging because Fed closer to neutral; wants to be at neutral when inflation running 0.75-1% above target