德意志银行-美国经济预测-how far to r-star-20170724-deutschebank？.pdfVIP

Deutsche Bank Research North America Economics Date United States US Economic 24 July 201 Perspectives How far to r-star? ■ The wide gulf between the Fed and market expectations for the terminal Matthew Luzzetti, PhD fed funds rate is not new. What is potentially new following several Senior Economist recent speeches by Fed officials is a softening of the conviction in the +1-212-250-6161 consensus Fed view that the real neutral fed funds rate, or r-star, will rise in the coming years. ■ The normalization of r-star has been a key pillar of the Feds rate expectations. A fundamental re-think of this outlook could therefore have dramatic implications for the dots and the trajectory of this hiking cycle. Indeed, a pivot toward a view that r-star will not recover would imply that the Fed may be quickly approaching the terminal fed funds rate. ■ Has the Feds narrative on r-star shifted recently? Comparing historical speeches by Chair Yellen to her recent comments indicates little shift in view. Estimating the implied neutral rate view from the Feds forecasts reaches a similar conclusion. However, it is clear that several Fed officials now openly question whether r-star will rise, setting up a lively debate on this topic within the Fed in the coming months. ■ Given a high degree of uncertainty about the current level of r-star, the absence of any noticeable drag from the Feds tightening on economic activity, and the continued easing of financial conditions, we argue that evolving views on r-star are unlikely to cause the Fed to re-think the near- term trajectory of its hiking cyc