Peter Warburton replies to Robin Marshall’s response to his article.
I am grateful to Robin Marshall for his comments on my article. I would like to respond to his substantive points, as follows.
It is true that real yields on Tips have edged higher, towards 1%, but the real Fed funds rate remains zero, in terms of core CPI inflation, and negative, in terms of headline CPI inflation or producer price inflation. Historically, there has never been a conjunction of real rates at such lows when the unemployment rate is at or close to its cyclical nadir.
