Christopher Waller, member of the board of governors of the United States Federal Reserve and always considered one of the representatives of the hawkish front, questioned the next trend of the natural rate of interest (r*) understood, according to economists, as the of interest that allows an economy to function at maximum capacity, at full employment and with a small constant inflation.
«In the last year there has been a lot of discussion about whether r* has increased or not», recalling that, in the future, some factors could still have a decisive influence on an increase.
These include the demographic data of a population of people over sixty who will have doubled in 2050, representing 22%. Add to this the reversal of the liberalization of the capital markets which, although not to a significant extent, will impact together with the action of central banks and sovereign funds around the world which will slow down demand for holdings in US Treasury securities.
Ultimately, however, “only time will tell how important the US fiscal position will be in influencing r*,” he concluded.
Waller had recently stated that he wanted to see “several months” of good inflation data before lowering rates. «Central bankers should never say never, but the data suggests that inflation is not accelerating and I believe that further increases in the policy rate are probably not necessary»has explained.
PHOTO: Bess Adler/Bloomberg
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