The Federal Reserve's megaphone: Speculation of a rise in the neutral interest rate may cause the Federal Reserve to delay a rate cut

As Nick Timiraos, the Fed's mouthpiece, recently wrote, in the debate over whether and when the Fed will cut interest rates, another important debate is unfolding: where will interest rates go in the long run? The crux of the matter is the neutral rate: the rate that can balance the supply and demand of savings while stabilizing economic growth and inflation. The neutral rate, sometimes referred to as "r *" or "r-star", cannot be directly observed, but can only be inferred. Every quarter, Fed officials predict the long-term rate, which is effectively their estimate of the neutral rate. Some now see a reason for the neutral rate to rise and potentially change asset prices across the board. Because the economy is strong and inflation is "sluggish".