from Zero Hedge
Several months after St. Louis Fed president James Bullard infamously flipped from one of the Fed’s most vocal hawks to the dovish equivalent of Kocherlakota, no longer expecting more than 1 rate hike over the next few years, earlier today another legacy dove, today San Fran Fed president John Williams published a letter titled “Monetary Policy in a Low R-star World“, in which he recommended an overhaul of policy orthodoxy.
Central banks and governments around the world must be able to adapt policy to changing economic circumstances. The time has come to critically reassess prevailing policy frameworks and consider adjustments to handle new challenges, specifically those related to a low natural real rate of interest. While price level or nominal GDP targeting by monetary authorities are options, fiscal and other policies must also take on some of the burden to help sustain economic growth and stability.