Clarida: Fed Acknowledging 'New Neutral' for Policy

The video discusses the current business cycle's uniqueness, highlighting the Fed's acknowledgment of a 'new neutral' for monetary policy, with interest rates not returning to traditional levels. It explores the concept of a terminal rate, with predictions suggesting a range of 2-3%, and the potential impact of future recessions. The Fed's revised economic forecasts indicate slower growth but higher inflation, reflecting a global slowdown in potential growth rates. The Fed's models suggest a need for higher inflation despite rate hikes.

What changes have been made to the Fed's GDP forecasts for the upcoming years?

In what way does the Fed's approach to inflation differ from traditional expectations?