Fed's Williams sees big drop in assets as possible systemic risk

[SAN FRANCISCO] San Francisco Federal Reserve President John Williams said Monday that the biggest systemic financial risk facing the economy is the possibility that "broad sets of assets are going to see big movements downward" as interest rates rise.

Speaking at a panel on systemic risk at the Milken Institute Global Conference, Mr Williams also said he believes the so-called neutral interest rate - the rate at which the economy can sustain healthy employment and steady prices - could be as low as 3 per cent. That rate is lower than the 3.25 per cent many at the Fed currently estimate.

REUTERS