MNI BRIEF: Williams Says Fed Independence Is Critical

New York Fed President John Williams on Thursday said Federal Reserve independence is critically important, pointing to recent examples of countries that lost monetary independence and experienced disastrous outcomes. 

"Fed independence is something that, or central bank independence, I should say, for any country, is critically important," he said in Q&A at the Economic Club of New York. "Independence has been proven to be a very effective way to safeguard monetary policy from very short run or partisan concerns." 

"You look at countries that have not had independent central banks and governments in the worst cases, like we had just a few years ago with Turkey or others, that led to very high inflation, very, very disruptive economic and harmful economic outcomes," Williams said.

Williams also commented on his view of the neutral rate, saying his own estimates are a bit lower than but similar to the FOMC's median of 3%. 

"But that doesn't drive the decisions about what do we do at this meeting, the next meeting," he said. "It's a question about, how do you balance the risks to maximum employment, price stability. How do you deal with all the short run factors that are affecting the economy that aren't maybe related to longer term developments."