“in the United States at least the Fed and the forecasting community has been consistently far behind the curve in recognizing that the neutral real rates has fallen. If, as I suspect, Rachel and Smith are right there will be much less scope to raise rates in the industrial world over the next few years than the world’s central banks suppose.”
Former Treasury Secretary Larry Sommers is usually thought to be the smartest guy in the room. I’d put more credence on this than Wall Street consensus or Fed member Stanley’s Fischer’s comments about rising Fed Funds rate to 3%.
Source: Blog | Larry Summers