“As monetary policy was premised lower for longer and needing a hot labor market, this is higher for longer and not needing a hot labor market in order to achieve price stability,” said Gapen.
Fed watchers say Powell may have confused market expectations when he said after July’s Fed meeting that the central bank was close to the neutral rate. The neutral rate is the level where the Fed does not have to raise or lower rates, and it had long been considered by central bank Fed officials to be 2.5%.
