Event Summary

In Conversation: NY Fed Presidents on COVID19

Video URL

Fri, Sep 4, 2020


On September 2, John C. Williams, President and CEO of the Federal Reserve Bank of New York, and William C. Dudley, former President of the New York Fed and member of the Bretton Woods Committee's Executive Committee, participated in a wide-ranging conversation with more than 250 attendees. The event provided a timely opportunity to discuss the Fed’s new monetary policy framework, its response to the novel coronavirus pandemic, and a range of other issues. 

  • Renewing Monetary Policy: The program began with brief remarks from Williams on the new monetary policy framework. Williams indicated that the Fed will tolerate periods where inflation exceeds 2% in order to achieve its goal of 2% average inflation. Inflation over 2% may even be “desirable” insofar as it supports the Fed’s efforts to achieve maximum employment. Consistent with this goal, Williams argued that the most important thing the Fed can do in this moment of crisis is support the labor market and “get America back to work.” When asked about policy implications of this new framework, Williams indicated that even considering a rate hike is “far off in the future” and that the Fed is considering how to deploy other tools, like asset purchases and forward guidance.  
  • Responding to Covid-19: Williams indicated that the Fed continues to draw from the toolbox established to combat the 2008 global financial crisis. For instance, swap lines and repo facilities for systemically important foreign central banks were established in March to boost the confidence of market participants and address the acute liquidity crunch. Williams noted that the Federal Reserve and foreign central banks have coordinated effectively throughout the crisis. According to Williams, the quick provision of liquidity in March was due in part to the lessons learned in 2008, when central bankers and policymakers were slower to respond. Williams also pointed out that, unlike the 2008 crisis, the banking system today has sufficient liquidity and capital to be a source of strength, buoying the economy by maintaining the flow of credit. 
  • Considering Fiscal Policy, Debt, and the U.S. Dollar: While the Fed’s “lend-not-spend” tools are critical, Williams repeatedly stressed the key role of fiscal policy. Fiscal policy measures like the CARES Act have helped small businesses weather the crisis and ensured that families can pay their bills and stay in their homes. When asked about the cost of these massive fiscal measures, Williams stated that he is “not concerned” about the country’s fiscal position, given the decline in interest rates and strong demand for U.S. Treasury securities. Despite the ongoing crisis and rising public debt, Williams expressed confidence that the dollar will remain the most important global reserve currency. In considering the global economy, Williams noted the critical role that the multilateral institutions play in providing direct assistance to governments and citizens, not unlike the role of fiscal policy. 

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