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I'd like to thank the Economic Club of New York for the invitation to speak today.1 This is my first time speaking in my new capacity as a member of the Federal Reserve Board. As such, I would like to be transparent on my thinking. Subsequent to last week's meeting of the Federal Open Market Committee (FOMC), it should be clear that my view of appropriate monetary policy diverges from those of other FOMC members; I view policy as very restrictive, believe it poses material risks to the Fed's employment mandate, and would like to explain why. There's no perfect means for determining appropriate monetary policy at any given time. That said, rules of a Taylor type are a useful way to gauge where the federal funds rate should be set based on the prevailing macroeconomic conditions and outlook. Let me first say that I find these types of policy rules to be useful as indications, but I am not slavishly devoted to them. The Taylor rule suggests policymakers ought to think about three key variables in determining the appropriate fed funds rate: inflation, the neutral rate of interest, and the output gap. As one might expect, changes in inflation and employment—one way of framing the output gap—receive due attention from Fed officials. However, changes in the neutral rate, or the policy rate that would be neither expansionary nor contractionary when the economy is at full employment, are often underappreciated. Some argue that leaving the neutral rate, which I will refer to as r*, out of the conversation makes sense because it is unobservable and therefore highly uncertain. But so are potential growth and the natural rate of unemployment, yet they are frequently updated and discussed. Because many r* estimates are based on empirical models requiring a great deal of time-series data, they can be backward-looking and slow to adjust. Moving too slowly to update a rapidly changing neutral rate raises the risk of policy mistakes. R* reflects the balance of saving and investment in an economy and it evolves over time with demographics, productivity, fiscal policy, and other factors. It is my view that previously high immigration rates and large fiscally driven decreases in net national saving, both of which raise neutral rates, were insufficiently accounted for in previous estimates of neutral rates. Monetary policy was not *MIRAN: APPROPRIATE FED FUNDS RATE IS ROUGHLY 2% TO 2.5% *MIRAN: MULTIPLE TRUMP POLICIES ARE LOWERING NEUTRAL RATE *FED’S MIRAN SAYS CURRENT INTEREST RATES ’VERY RESTRICTIVE’

*BESSENT: 10 FED CHAIR CANDIDATES INTERVIEWED BY NEXT WEEK: CNBC