New York Fed President John Williams said Fed’s new framework statement “directly and effectively addresses the problems caused by a low neutral rate and persistently low inflation.”

“First, it stipulates that, following periods when inflation has been running persistently below 2 percent, a temporary overshooting of the longer-run inflation target will likely be desirable to keep inflation and inflation expectations centered on 2 percent.

“Second, it makes clear that we seek inflation that averages 2 percent over time, consistent with our longer-run target.

“Finally, the statement makes unequivocally clear that we seek maximum employment and will aim to eliminate shortfalls from this broad and inclusive goal. These changes are mutually reinforcing and will meaningfully improve our ability to achieve both of our dual mandate goals in an environment of a very low neutral rate.”

William’s full speech here.

Speaking at a town hall to a group of educators, Fed Chair Jerome Powell repeated the assessment that the US economy is “now in a good place”. While there were some “big events” like Brexit, “the system has been strong”. He also emphasized that the essence of his job is to “earn and deserve trust” of American people to Fed that, it’s “working on their behalf in a non-political way” to support the economy.

Looking forward, Powell said income inequality and sluggish productivity are the biggest challenges of the next decade. He noted “We want prosperity to be widely shared. We need policies to make that happen.” And, “There are policies that we need to do that everyone should be able to agree on that will change mobility, improve people’s chances and enable people to better take part in the workforce of the future.”

Separately, Fed Governor Randal Quarles warned that “right now China is a downdraft as we think about what the potential impact for that is on our economy.” Though, the U.S. outlook “is still very solid” given the labor market in particular.

New York Fed President John Williams, in an interview with the Wall Street Journal, indicated that recent inflation readings over the past three months are “getting us closer to a disinflationary trend that we’re looking for,” noting these as “positive signs.”

However, Williams emphasized the need for “more data to gain further confidence” that inflation is moving sustainably toward the Fed’s 2% goal. He expressed satisfaction with the current policy stance, stating, “I feel like the stance of policy right now is working well.”

Williams suggested that if the favorable data trend continues, he would gain “greater confidence that inflation is moving sustainably to 2%.”