Monday, November 2, 2015

San Francisco Fed Head: Something Going On That Maybe We Don't Understand

From Reuters, Oct. 30:

Fed's Williams says low neutral interest rates a 'warning sign'
San Francisco Federal Reserve President John Williams said on Friday that low neutral interest rates are a warning sign of possible changes in the U.S. economy that the central bank does not fully understand. 
"I see this as more of a warning, a red flag that there's something going on here that isn't in the models, that we maybe don't understand as well as we think, and we should dig down deep deeper and try to figure this out better," he said during a panel discussion at the Brookings Institute in Washington. 
Williams, who is a voting member of the Fed's policy-setting panel through the end of the year, has said the central bank should begin to raise interest rates soon but thereafter go at a gradual pace....MORE
That is NOT reassuring, Mr. Williams.