Fed’s Williams says ‘ways to go’ before reaching neutral

(Reuters) – The U.S. central bank still has “a ways to go” before higher interest rates will start to slow the U.S. economy, Federal Reserve Bank of New York President John Williams said on Friday.

“We have a ways to go to get to some idea of what people think of as neutral,” he said in an interview on Bloomberg Television, referring to the theoretical “neutral” level of interest rates, at which borrowing costs neither stimulate nor restrain economic growth.

Fed officials currently estimate that rate at about 3 percent. Given strong U.S. job growth and economic momentum but very few signs of inflation, gradual interest rate hikes remain the “right path” for the Fed, Williams said.

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