Clarida: Fed Acknowledging 'New Neutral' for Policy

The video discusses the current business cycle's uniqueness, highlighting the Fed's acknowledgment of a 'new neutral' for monetary policy, with interest rates not returning to traditional levels. It explores the concept of a terminal rate, with predictions suggesting a range of 2-3%, and the potential impact of future recessions. The Fed's revised economic forecasts indicate slower growth but higher inflation, reflecting a global slowdown in potential growth rates. The Fed's models suggest a need for higher inflation despite rate hikes.

What changes have been made to the Fed's GDP forecasts for the upcoming years?

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In what way does the Fed's approach to inflation differ from traditional expectations?

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