Neutral Rate

Bank of Japan

2026-10-23 08:15:54

Source says Bank of Japan may keep raising rates quickly, with focus on December

Odaily reported, citing a source, that the Bank of Japan is expected to continue raising interest rates at a fast pace, with December seen as the key point to watch. The report said the BOJ believes the current policy rate remains far from the neutral rate. It also said the central bank sees inflation needing to stay stably near its target. The item was attributed to Jin10. No additional details were provided in the brief. The update was published as a 7x24 newsflash and focused on the expected policy path, the gap between the current rate level and the neutral rate, and the condition that inflation should remain close to target.

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IMF

2026-10-16 12:06:09

IMF says Bank of Japan may need one more rate hike to reach a neutral stance

The International Monetary Fund said the Bank of Japan may need one more rate increase to move closer to a neutral policy setting, according to remarks made by IMF Japan mission chief Rahul Anand at the IMF-World Bank annual meetings in Bangkok on Oct. 16. The IMF estimates Japan’s neutral rate at 1.1% to 2.2%, with a midpoint around 1.5%, while the BOJ’s current policy rate stands at 1.25%, already inside that range. Anand said one additional hike would likely be needed to fully move past the neutral threshold, though he also stressed that policy should remain flexible given rising global uncertainty. He also said inflation pressure in Japan is likely to persist because of elevated energy prices and companies passing on higher costs to consumers, with inflation expected to stay above 2% before gradually returning to the IMF’s 2% target by the end of 2027. The report also pointed to the BOJ’s last two hikes in July and December 2025 and noted that Japanese rate moves have previously coincided with sharp swings in crypto markets, including a more than 20% drop in Bitcoin over three days after the December 2025 hike.

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Federal Reser

2026-09-25 12:43:08

Fed Chair Warsh rejects the neutral-rate framework as his policy approach takes shape

Odaily, citing Substack, reported that Federal Reserve Chair Warsh has been measuring his tenure in days, and by day 127 the outline of his institutional overhaul had already come into view. The report said he moved quickly to reshape the post-FOMC press conference format, sharply cutting its duration and reordering the seating for reporters’ questions based on the alphabetical order of news organizations’ English names. Beyond those procedural changes, the article pointed to a sharper break in policy thinking and communication style. At a Sept. 16 press conference, Warsh explicitly rejected the traditional neutral-rate framework, saying the concept was useful only in academic settings and offered no guidance for the Fed’s rate-hike decisions. The report characterized the shift as a clear departure from past Fed leadership, with a policy logic likened to Alan Greenspan’s approach.

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Federal Reser

2026-09-19 10:24:09

Wall Street Reprices the Fed Path After Waller Downplays Neutral Rate and Reframes Tightening

Federal Reserve Chair Waller reshaped the market debate at the post-rate-hike press conference by repeatedly describing the move as removing a "dose of accommodation," rather than pushing policy into clearly restrictive territory. In his framework, even with the target range raised to 3.75%-4%, policy still carries a stimulative tilt. He also brushed aside neutral rate estimates as academically useful but operationally irrelevant for current decisions, a stance that challenges a policy reference point the Fed has relied on since the Bernanke era. That combination is forcing Wall Street to rethink both the likely number of additional hikes and the policy framework behind them. CME FedWatch data showed the probability of another hike in October climbing to about 58% from 42% a week earlier. Goldman Sachs and Bank of America both added to their tightening expectations, with BofA also calling for another increase in December. Futures imply a 2027 year-end rate of 4.635%, pointing to three to four more hikes. Analysts from Evercore ISI, BNP Paribas Securities, and Natixis Investment Managers said Waller’s language signaled a more hawkish stance, while also suggesting the market may need to adapt to a system that places less weight on r* and more emphasis on money supply and broad nominal conditions.

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Bank of Japan

2026-08-10 00:06:02

BOJ July Meeting Opinions: Rate Hike Pace Could Outpace Market Expectations

The Bank of Japan on Aug. 10 released a summary of board members' opinions from its July monetary policy meeting, showing that borrowing costs may rise faster than markets currently price in. A Cabinet Office representative stressed that appropriate monetary policy supporting price stability is essential for a strong economy, and called for close coordination between the government and the central bank. Several board members said the BOJ's rate-hike pace could outpace market expectations, and that agile adjustment of the policy rate is crucial while monitoring inflation risks. The summary also highlighted the need to normalize monetary policy by lifting the policy rate above the lower bound of the estimated neutral rate range. Board members warned that inflation pressures may become visible from summer onward and that the BOJ must clearly show its resolve to avoid excessive inflation. They also urged faster reduction of monetary support, arguing that the cost of delaying hikes is far from minor.

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Federal Reser

2026-06-29 10:31:07

Kevin Warsh's Hawkish Smoke Screen: A Hidden Path to September Rate Cuts

Academy Securities analyst Peter Tchir argues that Fed Chair Kevin Warsh's hawkish rhetoric may be a deliberate strategy to suppress long-end yields and pave the way for rate cuts. Markets have mispriced the probability of a September cut, with paths including redefining inflation metrics, contesting the neutral rate narrative, and leveraging Truflation real-time data to create room for easing. Tchir also offers a contrarian take on AI-driven inflation and recommends short-end treasury longs, overweight nuclear energy, and underweight semiconductors.

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