The Fed Searches For the Neutral Interest Rate, Where the Heck Is It? – Mish Talk

Bloomberg reports Fed’s Evans Sees Rates Rising Above Neutral Level

Twelve Key Video Quotes

• Interest rates are very low. They’ve been low for three years.
• We need to position monetary policy much closer to neutral. 
• Economy has a tremendous amount of momentum.
• The economy should do well in a neutral setting.
• I would say a neutral setting for monetary is somewhere in the 2.25 to 2.50 percent range. 
• It would be good if we got there by the end of our next March meeting. 
• If we accelerated that so we were there in December, that would be OK too. 
• By the time we get to December we ought to see if there is rollover in the inflation data.
• The optionality of not going too far too quickly is important. 
• Fifty [basis points] is obviously worthy of consideration. 
• If you want to get to neutral by December, that would probably require something like nine hikes this year and you’re not going to get there is you just do 25 at each meeting.
• So I can certainly see the case [for 50 basis point hikes]