The neutral rate of interest could be higher than pre-pandemic, San Francisco Fed President Mary Daly said Tuesday, weighing into a lively debate within the Federal Reserve system about what level of interest rates neither stimulates nor slows economic growth. (See MNI POLICY: Lively Debate At Fed Over Possible R-Star Rise)

"You absolutely could see ... anywhere between 2.5 and 3 as the nominal neutral" rate, Daly said at a Q&A sponsored by the Chicago Council on Global Affairs. The Fed's Summary of Economic Projections in September showed no change in the median 2.5% long run rate envisioned by policymakers, but some individual forecasts continued to creep higher.