Lacker, Jeffrey

Current estimates of the natural rate of interest in the United States are subject to a fair amount of uncertainty, but most are clustered at or just above zero. This is well above the actual real funds rate, which has been running below negative one. So at this point, estimates of the natural real rate of interest do not suggest that the zero lower bound is impeding the Fed’s ability to attain its 2 percent inflation objective. In fact, this perspective would bolster the case for raising the federal funds rate target.