John Maynard Keynes is credited with saying, “When the facts change, I change my mind. What do you do, sir?” Over the past decade, policymakers across the globe have been focused on getting their economies and financial systems back in order. But at the same time, a sea change in supply-side realities has taken place. These changes have redefined what is achievable, and challenged conventional wisdom on monetary policy.
Shifting demographic trends and a slowdown in productivity are driving slower trend growth and historically low levels of real interest rates across the globe. This new set of facts requires us to rethink what we once knew, reassess how to best foster strong and stable economies, and ready ourselves for the future.
With that start, it’s time I remind everyone 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.