Roger W Ferguson, Jr: Equilibrium real interest rate - theory and application (Central Bank Articles and Speeches)

I want to thank the University of Connecticut for providing me this opportunity to comment on the important and challenging concept of the equilibrium real interest rate and its relevance to monetary policy. I will use this occasion to discuss the role that estimates of the equilibrium real federal funds rate can play in thinking about the desired degree of policy accommodation. Those views, I should add, are my own and are not necessarily shared by anyone else in the Federal Reserve System. I hope that at the end of this talk you will conclude, as I do, that while the concept of the equilibrium real rate is a useful aid in thinking about setting monetary policy, it is not measured and observed with such precision as to provide a practical guide to the appropriate stance of policy.