(Finance) – The president of the Federal Reserve Bank of New York, John Williamshe stated that there is no evidence that the pandemic of Covid-19 has put an end to the era of very low interest rates experienced before the coronavirus crisis, although growth may be slower in the long run.
Williams argued this at an event in Washington DC, in an analysis of the r-star, the neutral interest rate that balances the economy in the long run.
“The main long-term consequence of the pandemic period is one reduction of potential outputbut the imprint on r-star appears to be relatively modest – said Williams – Importantly, there is no evidence that the era of very low natural interest rates is over.
The New York Fed, after the start of the pandemic, had suspended publication of r-star estimates due to extreme economic volatility and high uncertainty about how the pandemic would evolve.