, m3 and credit growth are likely to remain very weak or negative for some time to come. the decline in actual monetary growth is likely to overstate the deceleration in the underlying pace of monetary expansion. this is due to the continued steep slope of the yield curve, which explains shifts of funds out of m3 into longer - term deposits and securities. at the same time, the interest rate constellation continues to foster divergent developments in the main components of m3, as the narrow spreads between the rates on different short - term bank deposits reduce the opportunity costs of shifting funds from, for instance, short - term time deposits into overnight deposits. as a result, m1 continued to grow at a robust annual rate of 12. 6 % in november, when annual m3 growth turned negative. the negative annual growth of bank loans to the private sector conceals a return to positive annual rates of growth in the case of loans to households, while the annual growth of loans to non - financial corporations became more negative. such divergence remains in line with business cycle regularities, with turning points in the growth of loans to enterprises typically lagging those in economic activity. in the case of households, the latest data provide further confirmation of a levelling - off at low rates. in the case of non - financial corporations, the decline in loans continues to reflect mainly a strong net redemption of loans with a shorter maturity, while lending and borrowing at longer maturities remained positive. the subdued levels of production and trade, as well as the ongoing uncertainty surrounding the business outlook, will probably continue to dampen firms ’ demand for bank financing in the months to come. in the meantime, financing conditions for enterprises have improved over recent months in terms of the cost of both bank credit and market financing. in this respect, the continued negative flows in short - term bank loans to non - financial corporations observed in recent months may partly reflect better possibilities for substitution with different sources of longer - term financing. banks have continued to reduce the size of their overall balance sheets, mainly through downsizing the assets held vis - a - vis other banks. the challenge remains to adjust the size and structure of balance sheets while ensuring the availability of credit to the non - financial sector. to address this challenge, banks should use the improved funding conditions to strengthen further their capital bases and, where necessary, take full advantage of government support measures for recapitalisation. to sum up, the current key ecb interest rates remain appropriate. taking into account all

john c williams : no man is an island remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the 2019 asia economic policy conference, federal reserve bank of san francisco, san francisco, california, 14 november 2019. * * * as prepared for delivery “ no man is an island entire of itself, ” wrote the poet john donne in 1624. almost four centuries later, his words still ring true. and they are particularly salient when it comes to the financial fortunes of the global economy. today i ’ m going to explore the commonalities and interconnectedness of the global economy, and what that means for the outlook in the united states. but before i delve into these ideas, i want to say what a pleasure it is to be back at the san francisco fed, among so many friendly faces. the asia economic policy conference is always a fascinating day, and i ’ d like to thank mary daly for the invitation to speak, and zheng liu and mark spiegel for putting together an outstanding program. i knew i was back in san francisco when this morning i spent 20 minutes in line, waiting to spend five dollars on a cup of coffee. this is one thing for which inflation appears to be alive and well. before i explore issues like inflation in any greater depth, i should give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the federal open market committee or others in the federal reserve system. the u. s. economy if monetary policy represents a set of scales, on one side we have a strong u. s. economy with unemployment near a 50 - year low, and on the other, a more challenging and uncertain landscape. gdp looks to grow around 2 percent this year, and unemployment has stayed at or near historically low levels, boosted by solid job growth. at the same time, the federal open market committee ( fomc ) has moved to cut rates three times. what ’ s going on? there are three trends i ’ ll explore today, which all demonstrate the commonalities and the interconnectedness of the global economy. the first is the low neutral rate of interest, or r - star, the second is slowing global growth, and the third is rising geopolitical tensions. all are critically important to the long - term prospects of the u. s. economy, and each tells an important story about the conditions we ’