A new economic reality calls for a new approach to central banking. That’s the message a growing number of monetary policy makers are espousing -- and it’s a point San Francisco Fed President John Williams is making more forcefully than ever. Williams argues in an essay released Monday that the level of interest rates that neither stimulates nor slows the economy has fallen. In the new low-natural rate environment, the Fed’s policy of targeting low inflation will no longer make sense, he said. Williams isn’t the first to suggest that the economy is mired in a new normal, or to question the way the Fed is dealing with it. St. Louis Fed President James Bullard is pessimistic about potential...
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