00:00Oil moving higher now has very little inflationary consequence 12 to 18 months out.
00:04All the inflation happens up front.
00:06What does happen 12 to 18 months out is the economy might be weaker
00:10because every dollar that people put into filling their gas tanks is a dollar
00:14they're not spending on other goods and services.
00:17And so that might put upward pressure on the unemployment rate.
00:19So in the March summary of economic projections,
00:24I boosted my policy rate by half a percent, not due to oil in Iran,
00:28but due to the inflation data that we received in between the December summary projections
00:34and the March summary projections.
00:36That puts my projection at about neutral.
00:40So the neutral policy rate is the monetary policy interest rate
00:44that's neither stimulative nor accommodative.
00:46Right now, I think that's probably about 2.5 percent,
00:512.5 to 2.75 percent.
00:54We're about 75 basis points above that level.
00:57So, you know, I think it's, sorry, we're about a percentage point above that level right now.
01:03I think it's appropriate over the course of this year to just get back to neutral.
01:06I don't think the economy needs monetary policy to be slamming on the gas
01:12and accelerating the economy like it was in 2021 or 2022.
01:17But I also don't think it needs to be holding the economy back.
01:20And right now, it is modestly restrictive and it is holding the economy back.
01:23And I don't think that's consistent with the macroeconomic backdrop.
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