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r* in the monetary policy universe - navigational star or dark matter?

· Joachim Nagel, President of the Deutsche Bundesbank (Germany)

Summary written by Dark Majestic in its own words · topics: monetary policy and interest rates, growth, investment and productivity

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· Joachim Nagel Wiki · Deutsche Bundesbank Wikir* in the monetary policy universe - navigational star or dark matter?

ContextLecture by Joachim Nagel, President of the Deutsche Bundesbank, at the London School of Economics and Political Science, London, 12 February 2025.

Why it mattersThe Bundesbank president questions how much the natural interest rate should guide policy.

Problems raised
  1. The natural rate of interest is uncertain.
  2. Ageing and slow productivity shift saving and investment.
  3. Perceptions can change r-star.
Solutions proposed
  1. Use r-star cautiously in policy.
  2. Rely on multiple indicators.
  3. Monitor risk appetite in markets.
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