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Quo vadis, r*? The natural rate of interest after the pandemic

Author

Listed:
  • Gianluca Benigno
  • Boris Hofmann
  • Galo Nuño Barrau
  • Damiano Sandri

Abstract

Where is the natural rate of interest? How has it evolved? And where is it heading? In core advanced economies, several estimates of the natural rate have edged up. Shifts in the saving-investment balance and a more inflationary environment, which elicited a strong monetary policy response, may have been factors raising r* and perceptions thereof. The measurement of r* is, however, surrounded by very high uncertainty, making it a blurry guidepost for monetary policy.

Suggested Citation

  • Gianluca Benigno & Boris Hofmann & Galo Nuño Barrau & Damiano Sandri, 2024. "Quo vadis, r*? The natural rate of interest after the pandemic," BIS Quarterly Review, Bank for International Settlements, March.
    • Handle: RePEc:bis:bisqtr:2403b
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    References listed on IDEAS

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    Cited by:

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    3. Ryan Niladri Banerjee & Aaron Mehrotra & Fabrizio Zampolli, 2024. "Keeping the momentum: how finance can continue to support growth in EMEs," BIS Papers chapters, in: Bank for International Settlements (ed.), Keeping the momentum: how finance can continue to support growth in EMEs, volume 127, pages 1-39, Bank for International Settlements.
    4. Angeloni, Ignazio, 2024. "Assessing the ECB's monetary policy stance by comparing tightening cycles," SAFE White Paper Series 108, Leibniz Institute for Financial Research SAFE.
    5. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.
    6. Alexandre Carvalho & José Miguel Cardoso da Costa & Joana Garcia & Sandra Gomes & Pedro Pires Ribeiro, 2025. "The ECB’s monetary policy strategy: from the 2021 review to the 2025 assessment," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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    More about this item

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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