The "new normal" in the US will likely be characterised by lower interest rates than in the past, according to Federal Reserve governor Lael Brainard. This suggests the Fed should adopt a "cautious and gradual approach" to monetary policy, she said, on December 1.

Brainard pointed to a range of evidence suggesting the neutral rate of interest is lower now than before the crisis, and is likely to remain so. A weaker foreign outlook, lower potential output at home, and greater risk sensitivity are