Fed’s Miran explains his neutral rates stance

Neutral Rate Drivers - Population growth is typically a major driver of neutral rates, but recent years have seen an unprecedented acceleration [2] - Population growth changed more in the last 3 years than in the previous 30 years [3] - Fiscal deficits also influence neutral rates [1] Monetary Policy Implications - Changes in neutral rate drivers suggest the neutral rate itself may be changing more rapidly [4] - A decreasing neutral rate leads to passive tightening of monetary policy [4][5] - Maintaining a restrictive policy stance for an extended period increases the risk of inducing an economic downturn due to policy lags [6]