Lighthouse Lecture Series: The Global Growth Slump: Causes and Consequences
The President and Chief Executive Officer of the Federal Reserve Bank of San Francisco (FRBSF), Dr John C Williams a foremost economist in U.S. monetary policy decision-making presented a public lecture on The Global Growth Slump: Causes and Consequences at the Parliament of NSW on Tuesday 27 June 2017.
Dr Williams monitors economic and financial trends through the lens of the Federal Reserve System’s dual mandate: maximum employment and price stability in the domestic setting. The FRBSF covers the largest territory in the Federal Reserve System, encompassing the Western-most states. In a thought provoking address, Dr Williams, raised the long term possibility of improving economic trends in the US economy combining with persistently low interest rates. This presents the US Government and by implication the rest of the world with a dilemma. If monetary policy is to be combined with fiscal policy to create sustainable economic growth, there needs to be a buffer in interest rates to protect against the normal cyclical changes in the economy. Yet interest rates remain stubbornly low in at less than 0.5% in the US following the Global Financial Crisis. Traditionally they should now be around 3-4% as the economy grows, partly to give a buffer for future public policy options. No one seems to know why they refuse to move upwards, and what might be done to encourage them to do so. John Williams gave the quote of the evening’s discussion when he noted that people in Government in the US were “hoping” things might turn around: “Hope (he said) is not a strategy.”