John Williams has softened his support for the neutral rate of interest as a guide to policy, saying it may have “gotten too much attention”, despite his own efforts to emphasise the measure in earlier speeches.

The Federal Reserve Bank of New York president argued in remarks on September 28 that as the policy rate rises, “it makes sense the shift away from a focus on normalising the stance of monetary policy relative to some benchmark ‘neutral’ interest rate, often referred to as ‘r-star’.”

W