Fed’s Williams on Lowering Rates

Can they please just lower the rates already?

There’s a new controversy surrounding the Federal reserve and its potential lowering of interest rates. New York Fed President John Williams made comments insinuating his dissatisfaction with the interest rate decision. But then he walked them back.

Williams’ Comments

Member Williams spoke at a conference in New York on Thursday. He insinuated that the best policy for the Federal Reserve is to lower rates as soon as possible.

“When you have only so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” Williams said.

He went on to compound those comments by likening lowering rates to getting a vaccination. “It’s better to deal with the short-term pain of a shot than to take the risk that they’ll contract a disease later on.”

Williams’ comments are just the latest in an ongoing series of hints and suggestions that the Fed plans to lower rates. Though they did not lower them at the last meeting, there were serious discussions along those lines. Fed Chairman Powell faced a dissent for his first time at the helm of the organization.

At the time, Powell said “The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation.”

It sounds like Williams is a fan of such accommodation, which would likely come in the form of lower rates.

Comments Walked Back

But the New York Fed was quick to walk back Williams comments, so as to forestall those who would see it as a sign of lowered rates.

“This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting,” said a representative of the New York Fed, insisting that Williams’ comments were theoretical.

Whether they’re telling the truth or not, there’s no question that the general temperature of the Fed and Wall Street is bent towards change. Though the former once suggested that rate changes wouldn’t come before the end of the year, that seems less and less likely as the year unfolds.

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