(Finance) – The Neutral interest rate eurozone remains in the fork between 1.75% and 2.25%. This was communicated by the European Central Bank (ECB) in a study that will be contained in the first economic bulletin of the year.
The neutral interest rate is a rate that It is neither expansive nor restrictive. The measures of this rate (defined r*) are generally built as a balance value towards which interest rates tend to gravitate in the medium-long term, as the aggregated imbalances of savings and investment attenuates and the inflationary pressures Or disappointment that may have developed as a consequence of these imbalances dissipate.
The authors of the report – Claus Brand, Noemie Lisack and Falk Mazelis – point out that the estimates of the natural interest rate provide complementary information for monetary policy decisions and help communication on the position of monetary policy, but they cannot be seen as a mechanical indicator of monetary policy appropriate at any time.
“In the conduct of monetary policy, there is no alternative to the hiring of decisions on the basis of acomplete analysis of data and their macroeconomic implications – reads the report – in the euro area, in particular, the attention of this evaluation is triple: the prospects of inflation in light of the incoming economic and financial data, the dynamics of the underlying inflation and the strength of the transmission of monetary policy “.
It is also underlined that the intervals of punctual estimates from different models indicate a very high degree of uncertainty of the model. A further source of uncertainty derives from the fact that the neutral interest rate is one non -observable variable that must be deduced from observable dataa challenge known as “filtering”. In addition, several samples of data and reviews in retrospective data amplify the impact of the uncertainty of the filter, bringing to great ex-post variations in punctual estimates in-sample dl rate and adding an additional level of uncertainty.