US Neutral Interest Rate (r-star)
US neutral interest rate r-star estimates from the New York Fed HLW model.
| Indicator | Q2-2026 | Q1-2026 | Q4-2025 | Q3-2025 | Q2-2025 | Q1-2025 | Q4-2024 | Q3-2024 | Q2-2024 | Q1-2024 | Q4-2023 | Q3-2023 | Q2-2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| US4 | ||||||||||||||
| Natural interest rate r* | 1.01 | 1.09 | 0.89 | 1.05 | 0.91 | 0.79 | 0.87 | 0.92 | 0.94 | 0.93 | 0.94 | 1.03 | 1.09 | |
| Trend growth (g) | 2.41 | 2.44 | 2.47 | 2.58 | 2.49 | 2.35 | 2.45 | 2.51 | 2.46 | 2.35 | 2.5 | 2.46 | 2.26 | |
| Other factors (z) | -1.67 | -1.62 | -1.86 | -1.81 | -1.86 | -1.82 | -1.86 | -1.87 | -1.8 | -1.69 | -1.85 | -1.71 | -1.42 | |
| Output gap | -0.11 | 0.07 | -0.38 | -0.26 | -0.4 | -0.06 | 0.16 | 0.39 | 0.89 | 1.63 | 1.34 | 1.92 | 3.22 | |
| Canada2 | ||||||||||||||
| Natural interest rate r* | 1.76 | 1.72 | 1.81 | 1.92 | 1.91 | 2.03 | 1.92 | 1.85 | 1.75 | 1.67 | 1.61 | 1.67 | 1.75 | |
| Trend growth (g) | 1.94 | 1.88 | 1.91 | 2.01 | 1.98 | 2.09 | 2.04 | 2 | 1.93 | 1.85 | 1.74 | 1.74 | 1.77 | |
| Euro area2 | ||||||||||||||
| Natural interest rate r* | 0.09 | 0 | 0.08 | 0.21 | 0.17 | 0.27 | 0.2 | 0.24 | 0.15 | 0.35 | 0.37 | 0.51 | 0.67 | |
| Trend growth (g) | 1.27 | 1.25 | 1.28 | 1.28 | 1.27 | 1.31 | 1.25 | 1.25 | 1.21 | 1.19 | 1.16 | 1.15 | 1.14 |
Latest reading
Natural interest rate r* stood at 1.01% in Q2 2026. That is −0.1 pp from Q1 2026 and +0.1 pp from a year earlier. The series on this page is quarterly and runs from Q1 1961 to Q2 2026. Source: FED New York (Holston-Laubach-Williams natural rate estimates).
- Latest
- 1.01%
- Q2 2026
- vs previous period
- −0.1 pp
- Q1 2026
- vs a year earlier
- +0.1 pp
About this data
US neutral interest rate r-star estimates from the New York Fed HLW model. Quarterly data tracks the theoretical real interest rate without monetary stimulus since 1961. Use these figures to evaluate whether current United States monetary policy is restrictive or accommodative.
Frequently asked questions
- What is the US neutral interest rate (r-star)?
- It is the estimated real interest rate in the United States at which monetary policy is neither stimulative nor restrictive when the economy is at potential.
- How frequently is the natural interest rate published and what is the historical coverage?
- It is updated quarterly by the Federal Reserve Bank of New York, with historical estimates extending back to 1961.
- Which specific components and regions are featured in the table?
- The table provides estimates for the United States alongside Canada and the Euro area, including the natural interest rate, trend growth, residual other factors, and the output gap.
- How should analysts use the neutral interest rate?
- Analysts compare the current real federal funds rate against r-star to determine whether monetary policy is actively tightening or easing economic conditions.
