Fed’s Williams Says Low Neutral-Rate Era ‘Appears Far From Over’

Federal Reserve Bank of New York President John Williams said the US economy’s neutral interest rate may not be much different than before the pandemic, given the structural factors that have kept a lid on rates haven’t gone away.

“The global demographic and productivity growth trends that pushed r-star down have not reversed,” Williams said Monday in remarks prepared for a conference hosted by Mexico’s central bank. Economists often refer to the so-called neutral interest rate — where it should be when monetary policy isn’t fighting unemployment or inflation — as “r-star,” based on the mathematical notation used to represent it in economic models.