Fed's Fischer: There's a Strong Case to Raise Rates

The video discusses the concept of the equilibrium real rate, which has significantly decreased, affecting the ability to use expansionary monetary policy without causing inflation. It explores the challenges in estimating 'R Star', the real rate at full employment, and highlights the consensus among the Open Market Committee members on its lower estimates. The discussion emphasizes the implications of these estimates on monetary policy and economic stability.

What is the primary implication of a decreased equilibrium real rate for monetary policy?

• Limited room for expansionary measures

• Increased room for expansionary measures

• Lower employment rates

• Higher inflation rates

What is a major challenge in estimating the equilibrium real rate?

• Lack of historical data

• High standard deviation and uncertainty

• Too many variables to consider

• Inconsistent economic models

Why is the historical context of interest rates important in understanding the equilibrium real rate?

• It predicts future economic trends

• It determines the value of currency

• It shows a direct correlation with employment rates

• It highlights the lack of inflation despite low rates

What is the general consensus among Open Market Committee members regarding the equilibrium real rate?

• It should be increased

• It has remained stable

• It is irrelevant to current policy

• It has decreased

How do the opinions of Open Market Committee members regarding the equilibrium real rate reflect their thinking?

• They are based on outdated models

• They are independent yet converging

• They are influenced by external pressures

• They are inconsistent and varied