The New York Fed's estimates of the neutral real interest rate

Note
United StatesEuro areaCanada

The New York Fed's estimates of the neutral real interest rate. 3 series: United States, Euro area, Canada. Latest, 2026 Q2: United States 1.01%; Euro area 0.09%; Canada 1.76%.

r*, the real short-term rate expected to prevail when an economy is at full strength and inflation is stable. These are the New York Fed's model estimates, revised with each quarterly release, and carry wide uncertainty; Balance of Power reports them and makes no estimate of its own.

See also: Laurence Wilse-Samson, "Global Finance: A Money View", chapter 15, Central Bank Operations

Classroom exerciseCompare the U.S. estimate in 2007 and in 2019. If the neutral rate fell between them, what does that imply about how restrictive a given policy rate was in 2022–23? Use the policy-rates chart alongside this one. Teach page

Percent, realFederal Reserve Bank of New York, Holston-Laubach-Williams (2023) model, one-sided estimates (current-estimates workbook).Data through 2026 Q2✓ Checked against New York Fed HLW current estimates of 27 Aug 2026, U.S. r* 2026 Q2 (one-sided), 1.009 percent

Cite asBalance of Power, "The New York Fed's estimates of the neutral real interest rate", data through 2026 Q2. Source: Federal Reserve Bank of New York, Holston-Laubach-Williams (2023) model, one-sided estimates (current-estimates workbook).

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Latest values
DateUnited StatesEuro areaCanada
2024 Q30.920.241.85
2024 Q40.870.201.92
2025 Q10.790.272.03
2025 Q20.910.171.91
2025 Q31.050.211.92
2025 Q40.890.081.81
2026 Q11.090.001.72
2026 Q21.010.091.76
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Inputs
ColumnSourceSeries keyStatusData through
usnyfedHLW/USlive2026 Q2
eanyfedHLW/EAlive2026 Q2
canyfedHLW/CAlive2026 Q2