Bloomberg Surveillance · Wednesday, September 16, 2026
The Federal Reserve has increased its projection for the long-run neutral interest rate to 3.2% from 3.1%. This adjustment, coupled with forecasts for higher inflation this year, suggests a potential shift towards a 'higher for longer' interest rate environment.
“Almost as significant, they raise their long-run view, essentially the neutral rate, to 3.2% from 3.1% in June.”
“I think the move up in the long-run neutral rate is important because they've been talking about that, as a possibility because of AI and the spending on AI. And that could mean that we're in a hire for longer kind of environment, a new regime, as it were, for interest rates.”
“If Warsh characterizes this as a recalibration to higher neutral rate, reflecting higher nominal growth, he can land the plane.”