The Fed's Williams talking about the FOMC toolkit

  • Productivity growth has slowed pretty dramatically
  • Low yields don't just reflect current Fed rates
  • "It's about the tug-of-war, not only in the United States, but globally, between savings and investment"
  • "I think interest rates, even when we're past this business cycle, will be lower"
  • "An economy that's growing more slowly doesn't need to invest as much"
  • New normal for rates much lower than in the past
  • The trajectory of hikes will be shallower
  • US doing well, we're in a good position right now
  • We'll be raising rates over next couple of years
  • Don't want to harm or disrupt global economy
  • Negative rates very unlikely in US
  • Hard for me to understand gold as a hedge on risk

He hasn't touched on the current outlook but if you extrapolate from the focus on demographics, it's dovish because the average age is only getting older.

What's interesting here is that Williams is adopting and accepting the idea that the New Normal is here. The Fed had long blamed a series of 'temporary' factors for disappointing growth and inflation. Williams, at least, is giving up on that idea.

This would have been an amazing speech 3 years ago but the market already knows what he's saying.