FXStreet — The Fed chief of St. Louis, James Bullard discussed the reasons for the downward trend in the neutral interest rates during a presentation on Monday at the financial markets conference of the Federal Reserve Bank of Atlanta.
There are three factors that can affect the neutral interest rates: 1) The growth rate of labour productivity, 2) the growth of the participation rate and 3) the tendency of investors to safe assets.
Labour productivity seems to be in a Phase of low growth to be stuck.
In terms of the participation rate: It looks as if the USA is in a Phase of low growth, but recent observations suggest a rapid acceleration close.
According to this analysis, the interest rates are currently at a level.
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