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 ’

re experiencing today. low r - star those of you who know me won ’ t be surprised that i ’ m starting with low r - star! the neutral rate of interest — the rate that prevails when monetary policy is neither restrictive nor accommodative — has been an area of study, and a personal passion, for the past two decades. i could talk about r - star at great length, but you may be relieved to hear that for the purpose of this speech, there ’ s just one point i want to make : r - star has fallen, not only in the u. s., but around the world. 1 / 4 bis central bankers'speeches fundamental shifts have been occurring in the two main drivers of r - star over the past two decades : demographics and productivity growth. lower fertility rates and aging populations, as well as slower productivity growth, have pushed down r - star by as much as two percentage points in a number of developed nations. these structural shifts are having fundamental effects on real interest rates, growth, and inflation. a number of advanced economies have inflation below desired levels and longer - term interest rates that are well below where they were a decade ago. there are, of course, a few outliers, but the commonalities between the world ’ s developed economies are becoming more and more apparent. there ’ s no doubt that the u. s. is experiencing first - hand the effects of the structural shifts in demographics and productivity growth. but the fact that these changes are a common experience for so many developed economies creates challenges to our economic prospects at home. slowing global growth which brings me to the second trend i highlighted : slowing global growth. this story — of low interest rates, low inflation, and slow growth — is showing up in the data. the latest numbers from the international monetary fund ( imf ) follow the recent trend of steady downward revisions of growth estimates. their forecast for global growth for 2019 is now 3 percent, which is the lowest since 2008 – 09, and it ’ s not hard to think of scenarios in which growth slows even further. 1 in the old days, central bankers used to worry about inflationary pressures being too great. old habits die hard, and i ’ m always on the lookout for signs that inflation is rising too fast. but in the current climate it ’ s inflation that ’ s too low that ’ s of greater concern. you see, my five - dollar cup of coffee masks an