Undershooting and Overshooting: Is This Time Different?
In the last two expansions, the unemployment rate fell below the NAIRU, by ½ percentage point in one caseand by 1 percentage point in the other. Inflation in each case moved to near 2% or modestly above for a few
years. The FOMC raised the funds rate beyond the estimated neutral level in each case, by 100 basis points
and 200 basis points, respectively. In each case, a recession quickly followed. Today, the unemployment rate
(4.1%) is already ½ percentage point below participants’ median estimate of the NAIRU (4.6%), and we
expect it will undershoot the NAIRU by a full percentage point and stabilize.......
Led by former Federal Reserve Board Governor, Larry Meyer, Monetary Policy Analytics is an independent research firm focused on the macro economy, FOMC policy and interest rates. Our research is used by some of the world's largest hedge funds, fixed income asset managers, pension fund managers, currency desks, insurance companies and money center banks. The written commentary is outlined below:
Macro Views - A thematic presentation of Monetary Policy Analytic’s U.S. forecast that links our forecast of the key macro variables to monetary policy actions and market developments.
FOMC Briefing & Statement Comments - Timely, comprehensive commentaries interpreting and analyzing the implications of all FOMC communications.
Rates - Analysis and projections of the Fed's balance sheet, term premium, R* and their affects on the broader fixed income markets.
Weekly Update - Each week we publish an update based on incoming data.
In addition to the above, our clients may receive direct access to Larry Meyer and our team of Senior Economists and Senior Advisers via phone, email, conference call and in-person meetings.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.