May 20, 2019 / 7:17 PM / 4 months ago

Policymakers have changed views on how low unemployment can go: Fed's Williams

FILE PHOTO: John C. Williams, president and CEO of the Federal Reserve Bank of New York speaks to the Economic Club of New York in the Manhattan borough of New York, U.S., March 6, 2019. REUTERS/Lucas Jackson/File Photo

NEW YORK (Reuters) - U.S. economic policymakers have changed their view of how low unemployment can get without sparking inflation, a top Federal Reserve official said on Monday.

Speaking at an event designed to gather views on how the Fed should tweak its policies going forward, New York Fed President John Williams said policymakers are focused on how they can sustain the U.S. economic expansion, maintain a strong labor market and keep inflation low.

In March, the median Fed official estimated the long-run U.S. unemployment rate at 4.3%. That figure is lower both than their 4.7% estimate two years prior and the actual unemployment rate now, which has edged down to 3.6%.

As part of a broad policy review, Williams, a permanent voting member on the Fed’s rate-setting committee, has been advocating for the Fed to systematically respond to periods of tepid inflation by keeping U.S. interest rates “lower for longer.” But lower rates could also spark higher rates of wage and other forms of price inflation in the future.

Reporting by Trevor Hunnicutt; Editing by Chizu Nomiyama

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