San Francisco Fed President John Williams said that the r-star neutral rate remains at 2.5% despite strong growth. He noted that “some economists and central bankers have pointed to signs that the fortunes of r-star are set to rise.” However, he didn’t see “convincing evidence” yet.
Fed has been describing monetary policy as “accommodative” for years. With federal funds rates just a few hikes from 2.5%, William saw the need to “revisit” the language. But “that would be a committee decision about how to best describe the committee’s view around where monetary policy is positioned and where we see it going.”
