john c williams : fulfilling our economic potential remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the association for neighborhood & housing development 2019 annual conference, new york city, 11 april 2019. * * * as prepared for delivery introduction thank you for that warm welcome. as you may be aware, last year i moved from san francisco to take on the role of president of the new york fed. in many ways california and new york are like different countries — the weather is a big adjustment, for starters! but through my meetings with community leaders and visits to the bronx and brooklyn, i ’ ve come to appreciate that we ’ re facing a lot of the same issues in my new home that i saw in the san francisco bay area. the main topics of discussion — displacement as a result of gentrification, inequitable growth, and a critical shortage of affordable housing — are all ones we were grappling with on the west coast as well. these issues are complex and challenging, and there are no easy answers, so i want to start by saying thank you for all the important work you do. there are a couple of topics i want to talk about today. the first is why the work you do is so important, and the second is the role i see the federal reserve bank of new york can play in supporting you today, and going forward. before i go any further i ’ ll give the usual fed disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. dual mandate apart from a stint running a pizza shop, i ’ ve worked in the federal reserve system for my whole career, nearly 25 years. and i ’ m not alone. when you ask people at a federal reserve bank how long they ’ ve worked there, their response is often measured in decades, not years. what makes them stay? working for a mission - driven institution. and speaking of our mission, the federal reserve has two goals : maximum employment and price stability. we want our economy to reach its potential in terms of jobs and growth and we want low, stable inflation. while these two goals are critically important, they are broad and highlevel. the monetary policy decisions we make have important effects on the overall number of jobs and wages, but they don ’ t determine what economic growth looks like across communities, or who benefits from it.

federal funds rate ; the timing will depend on how economic and financial conditions and the economic outlook evolve. the committee said that it does not currently anticipate selling agency mortgage - backed securities ( mbs ) as part of the normalization process, but noted that limited sales might be warranted in the longer run to reduce or eliminate residual holdings. bis central bankers ’ speeches first : ioer. the federal reserve began paying interest on reserve balances in october 2008 ; interest rates on required and excess reserve balances have both been ¼ percent since mid - december 2008. 4 the federal reserve intends to use adjustments to the ioer rate – a rate it directly administers – as the main tool for moving the fed funds rate and other short - term interest rates into its target range. the ioer rate is essentially the rate of return earned by a bank on a riskless overnight deposit held at the fed, thus representing the opportunity cost to a bank of using its funds in an alternative manner, such as making a loan or purchasing a security. in principle, no bank would want to deploy its funds in a way that earned less than what can be earned from its balances maintained at the fed. even though banks are the only institutions eligible to earn ioer, arbitrage should lift market rates up to the level of the ioer rate. in practice, however, with the large levels of excess reserves in the system, certain institutional aspects of money markets – including bank - only access to ioer, credit limits imposed by cash lenders and other impediments to market competition, and the costs of balance sheet expansion associated with arbitrage activity – appear to create frictions that have made ioer act more like a magnet that pulls up short - term interest rates than a firm floor beneath them. 5 second : an on rrp facility. the fomc will supplement the magnetic pull of changes in the ioer rate with an on rrp facility to help control the federal funds rate. 6 under the facility, the desk will offer general collateral reverse repurchase agreements at a specified offering rate to a broad set of counterparties – including several types of nonbank financial institutions that are significant lenders in u. s. money markets. on rrps, particularly if offered at full - allotment – that is, fulfilled for any amount demanded at the designated rate – are conceptually similar to ioer for banks in that they provide access to a risk - free overnight investment.