A good article, but nothing there really supports the assertion in the blurb up top that:
> Far from being too restrictive, US monetary policy is almost certainly too loose
I suspect this may have been written by an editor and not the author of the article. Because it seems inconsistent with the argument in the text that:
> To be sure, the fact that US monetary policy is looser than many believe should not discourage the Fed from cutting rates in September and November…
And while the main argument here is that r* has increased by *as much as* 1.5%, it is still likely quite a bit below short term rates that are over 5%. A reasonable estimate might be something in the 1.5%-3.5% range.
So Posen seems to be really saying that monetary policy is only moderately tight, not that it is “almost certainly too loose”.
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A good article, but nothing there really supports the assertion in the blurb up top that:
> Far from being too restrictive, US monetary policy is almost certainly too loose
I suspect this may have been written by an editor and not the author of the article. Because it seems inconsistent with the argument in the text that:
> To be sure, the fact that US monetary policy is looser than many believe should not discourage the Fed from cutting rates in September and November…
And while the main argument here is that r* has increased by *as much as* 1.5%, it is still likely quite a bit below short term rates that are over 5%. A reasonable estimate might be something in the 1.5%-3.5% range.
So Posen seems to be really saying that monetary policy is only moderately tight, not that it is “almost certainly too loose”.