Williams Calls for Rethink of Fed Orthodoxy in New Economic Era

Federal Reserve Bank of San Francisco President John Williams called for monetary and fiscal policy makers to rethink the way they operate, saying America is getting a taste of a new economic normal that warrants a change in orthodoxy.

Williams’ analysis centers on the idea that neutral interest rates -- those that neither stoke nor slow the economy -- are historically depressed and are poised to stay that way. To better adapt, he urged governments to prepare to provide a stronger fiscal backstop and central bankers to consider scrapping the practice of targeting low inflation.