Fed’s Williams Says Long-Term Trends Still Back Low Neutral Rate

Federal Reserve Bank of New York President John Williams said the longer-term trends that led to declines in neutral levels for interest rates before the pandemic still prevail.

“My own Holston-Laubach-Williams estimates for r-star in the United States, for Canada and the euro area are about the same level as they were before the pandemic,” Williams said Friday on a panel organized by the Central Reserve Bank of Peru, referring to his model’s estimate for the neutral rate which neither stimulates nor slows the economy.