Fed's Williams argues for vaccinating economy when rates are low
Policymakers need to add stimulus early to deal with too-low inflation when rates are near zero and cannot wait for economic disaster to unfold, a Federal Reserve policymaker said on Thursday, APA reports citing Reuters.
In a speech read as a strong argument in favor of quick and aggressive action by the Fed to cut rates this month, New York Fed President John Williams said that one of the lessons from his research is that, when rates and inflation are low, policymakers cannot afford to keep their “powder dry” and wait for potential economic problems to materialize.
He said that is especially true with neutral rates that would neither restrict nor accelerate the U.S. economy “around half a percent.” The Fed’s policy rate is currently in a range of 2.25-2.50%.
“It’s better to take preventative measures than to wait for disaster to unfold,” Williams said in a speech he delivered at a central banking conference here. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.”
Short-term bond yields dived on the remarks, with 2-year Treasuries US2YT=RR falling below 1.78% from over 1.81% seconds earlier. Interest-rate futures spiked, pricing in higher chances of a larger rate cut sooner, and broad U.S. stock indexes traded at their highs for the day.
In recent weeks, Fed policymakers have identified a host of concerns they think could end what is now the longest U.S. economic expansion on record. Chief among those concerns include a U.S.-China trade war denting business confidence, a global manufacturing slowdown and inflation below the Fed’s target of 2% a year.
Williams, who will vote on rates at the Fed’s next policy meeting on July 30-31, sounded particularly concerned about inflation, with the Fed’s preferred measure of prices gaining 1.6% a year now.
“People may start to expect it to stay that way, creating a feedback loop, pushing inflation further down over the longer term,” Williams said. “The lower average level of inflation translates into a lower level of interest rates cuts available during a downturn, making it even harder for policymakers to achieve their goals.”
Taking quick action to cut rates in the face of “adverse economic conditions” and keeping rates lower for longer, Williams said, “should vaccinate the economy and protect it from the more insidious disease of too low inflation.”
Other Fed policymakers seem less sure. Kansas City Fed President Esther George, for instance, on Wednesday suggested she might be willing to support a cut, but only if looming economic risks materialize.
Istanbul Metropolitan Municipality Mayor contracted coronavirus
Turkey’s MoD: Armenia should put an end to illegal occupation of Azerbaijani lands
Teenager who sustained injury and died in hospital as result of infliction of rocket strike by Armenia on Azerbaijan’s Ganja is citizen of Russia
Numan Kurtulmuş: “It is a good thing that today Azerbaijan has the power to solve its fate”
Assistant to President: "We call on civilians living in the occupied territories to stay away from military facilities"
Russia adds 16,521 COVID-19 cases in a day
Expert: “Despite efforts of some forces, Georgian-Azerbaijani relations are at highest level”
13-years-old teenager who sustained injury as result of infliction of rocket strike by Armenian army on Azerbaijan’s Ganja died
Azerbaijani MoD: Gubadli region is under artillery fire from the territory of Armenia
Russia put on international wanted list Armenian acused of homicide
Hikmat Hajiyev: "As a result of missile attack to Tartar city of Azerbaijan 16 years old teenager killed"
Azerbaijani MoD: Enemy is firing rockets at our residential settlements
Azerbaijani MoD: Enemy is firing at our territories in the Goranboy-Naftalan direction
Azerbaijani MoD: Enemy’s military equipment destroyed at night - VIDEO
Azerbaijani oil price slightly decreases
Azerbaijani MoD: Enemy is shelling the human settlements of Azerbaijan
President Ilham Aliyev gave interview to French Le Figaro newspaper
Russia searches through Interpol for 2 Azerbaijanis - PHOTO
Azerbaijani MoD: Enemy's UAV was neutralized
Gas prices decrease on world market
Global coronavirus cases exceed 42,4 mln.
Kyrgyzstan reports 556 new COVID-19 cases, 55,144 in total
Hikmet Hajiyev: Smerch missile hit the garden of private residential house
MoD: Several enemy strongholds were destroyed and important heights were liberated
MoD: Combat operations continued in Agdara, Khojavend, Fizuli, Hadrut and Gubadli with different intensity
In tit-for-tat move, Iran sanctions US envoy to Iraq
Lebanon: Hariri to form technocratic goverment
215 civilians die during 3 months in Yemen: UN
Turkey’s daily COVID-19 patients top 2,000 for 3rd day in a row
Libya truce deal seems not reliable: Turkish leader
Public transport not to function in Baku and several more cities and regions at weekend
MoD: The enemy's artillery units and command post were destroyed - VIDEO
Destruction of the volunteer groups and military equipment of the Armenian armed forces in the Khojavend and Fizuli directions of the front - VIDEO
Hikmet Hajiyev: "We once again warn the Armenian leadership committed war crimes"
Azerbaijani Foreign Minister met with Robert O’Brien
Azerbaijan Defense Ministry: "UAVs of Azerbaijan do not conduct a flight over the territory of Armenia"
MoD: Our army has enough armored vehicles to strike the enemy and they are applied in accordance with operational situation
MoD: Information circulated by the Armenian side about the destruction of a large unit of Azerbaijani special forces is false
MoD: Information about the alleged artillery shelling of Khankendi and Khojavend districts is not true
Israel's Netanyahu says deal with Sudan start of 'new era'
Israel, Sudan agree to normalize ties with U.S. help: joint statement
Azerbaijani FM meets with Mike Pompeo in Washington - UPDATED
MoD: Information circulated by Armenian side about Iran's artillery shelling of Azerbaijani positions false
Le Figaro: Armenia rejects any diplomatic solution
Azerbaijan's MoD: Our troops monitor operational conditions
Entry/exit to the city of Mingachevir, Agstafa, Bilasuvar, Khachmaz, Ismayilli, Gakh and Zagatala districts suspended
Italian govt weighing nationwide lockdown
Ukraine reports 7,517 new coronavirus cases
MoD: Liberated from the occupation the Minbashili village of the Jabrayil region - VIDEO
President Ilham Aliyev: Four villages of Gubadli district were liberated
MoD: Military personnel and armored vehicles of the enemy getting ready for redeployment destroyed
Armenian detainee: “I appeal to Armenian people: No need to fight for land that does not belong to us" - VIDEO
Major who surrendered to Azerbaijani Army appeals to Armenian people: "Do not let our children fight in Azerbaijan’s territory" - VIDEO
Armenians target Azerbaijan's residential settlements, civilian population, and civilian facilities - PHOTOSESSION
Azerbaijani MP suggests to establish shelters for beggars
Azerbaijan commemorates Khojaly genocide - PHOTOSESSION
14 years pass since establishment of the Ministry of Emergency Situations: They always come to your aid in any difficult moments - PHOTOSESSION - VIDEO
First Vice-President Mehriban Aliyeva attended opening ceremony of rebuilt Azerbaijan pavilion at Exhibition of Achievements of National Economy in Moscow - UPDATED
President of Azerbaijan: “So far, the enemy’s 241 tanks have been destroyed, 39 tanks were taken as military trophy”
President Ilham Aliyev: Zangilan city and 6 villages of the region, 18 villages of Fuzuli, Jabrayil and Khojavend regions liberated from occupation
Hikmat Hajiyev: “About 24 thousand missiles were launched on Azerbaijan’s residential settlements, civilian facilities by Armenia”
Israeli Ambassador: Attacks on civilians unacceptable regardless of nationality or religion