A sea change in economic conditions has pushed interest rates considerably lower than they were in the past and are likely to stay there for a while, San Francisco Fed President John Williams said Friday.
While Williams did not give a specific forecast for rates ahead, he said the pace is likely to continue to be gradual. He spoke specifically about the so-called neutral rate, which is neither restrictive nor stimulative.
"Any way you try to cut this, slice and dice the data, the neutral rate appears to be much lower today than it was 10 or 15 years ago," he said during a speech in his current home district. "If you would have asked me 20 years ago ... what's the neutral interest rate, I would have said 4.5 percent. ... You ask my colleagues today, the answer today is 3 percent."
Williams has been nominated to switch coasts and take the presidency at the New York Fed, but has not been confirmed by the full central bank board yet.