New York Fed President John Williams highlights several challenges to the US economy, which he said is experiencing a robust resurgence.
Kristian Rouz — President of the Federal Reserve Bank of New York John Williams, who took office Monday, said the US economy is currently “in good shape,” but the banking sector culture could be improved. Williams made his remarks at an event dedicated to bank corporate culture on the first day of his new job.
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Describing his view of central bank policy, Williams stressed he is neither a hawk nor a dove, and highlighted the importance of a weighted and data-dependent approach to policymaking.
“As a policymaker, solid growth, a strong labor market, and inflation near our target are all exactly what I want to see,” Williams said, touting the strength of the broader US economy.
As head of the regional Fed, however, Williams is paying closer attention to the economic development of the US North East, where many states — including New York and Connecticut — have struggled with massive fiscal deficits in recent years.
Williams stressed the importance of prudent central bank regulation in times of economic prosperity aimed at ensuring a more leveled distribution of economic growth.
“I start my first day with a deep commitment to securing the stability of our financial system and prosperity for our economy,” Williams said, adding that “there’s a risk of complacency setting in.”
Williams previously served as president of the San Francisco Fed, and his remarks come at a time when annual US economic growth is approaching 3 percent, whilst inflation is above the Fed 2-percent target, and the labor market is close to “full employment,” with the jobless rate at 3.8 percent.
The New York Fed president said that albeit the US economy is now doing much better than during the previous two decades, the underlying structural reasons that have caused so many problems in the past remain unaddressed.
Williams said that the banking sector corporate culture remains weak, as many lenders are seeking to maximize their operational revenues for whatever it takes. Questionable banking practices include predatory lending, opening new accounts on behalf of customers without their knowledge, as well as weak corporate supervision and board management.
America’s financials must be “holding management and boards of directors to high standards in terms of culture and conduct, even when the numbers look rosy,” Williams stressed.
He also described his new job as critically important to ensuring the sustainability of the US financial system. Williams said the New York Fed conducts monetary policy, oversees the largest and most systemically-important financials — referring to Wall Street corporations — and manages key international payments systems.
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Williams suggested his approach to policymaking is free of ideological dogma and is pragmatic and data-driven, and vowed a greater degree of transparency and openness in communicating the New York Fed’s decision-making to market participants.
“Throughout, I will strive to explain my reasoning, particularly when my views may differ from those of others,” Williams said.
He also stressed his commitment to seeking custom solutions to the needs of households and enterprises in his district, which falls in line with the “tailored” approach to policy touted previously by Fed Chair Jerome Powell.