SF Fed’s Williams: “Boring is the New Exciting”

June 25, 2017

  • Says balance sheet management process will be widely telegraphed, gradual, predictable and “boring” to minimize risk of unnecessary market volatility
  • Stresses importance of public understanding
  • Reaffirms Fed goal of keeping expansion going “as long as possible” by bringing monetary policy back to more normal setting; keeping it on path that neither exceeds speed limit, nor stalls

Sydney, Australia – Today, John C. Williams, President and CEO of the Federal Reserve Bank of San Francisco, affirmed that the Fed’s process for normalizing monetary policy will continue to be widely telegraphed, gradual and transparent—both in terms of the current process of normalizing conventional monetary policy, and in the upcoming process of gradually drawing down the Fed’s balance sheet. Speaking to an audience at the University of Technology Sydney, Williams said that the United States has reached a “turning point” in its transition from economic recovery to expansion, and that the Fed’s goal is to keep the economy growing at a rate that can be sustained over time.

“The main goal of U.S. monetary policy is therefore to keep the expansion going as long as possible,” said Williams. “That entails bringing monetary policy back to a more normal setting and taking actions to keep the economy on a path that neither exceeds its speed limit, nor stalls.”

Added Williams: “The more public understanding, the less chance that said actions will fuel unnecessarily volatility in the markets. Therefore, our process has been widely telegraphed and it will continue to be gradual, predictable and transparent, or in a word, ‘boring.’”

“Indeed, my new mantra is ‘Boring is the new exciting,’” he added.

Williams indicated that the Fed will likely start the process of normalizing the balance sheet this year, assuming the economy evolves broadly as expected. “Our modus operandi throughout this process will be similar to that which we’ve adopted for normalizing conventional monetary policy,” he said, reiterating the need for a clearly communicated, predictable and organic process that runs at a gradual pace.

In speaking about the Fed’s strategies for normalizing conventional monetary policy, Williams explained that “gradually raising interest rates to bring monetary policy back to normal helps [the Fed] keep the economy growing at a rate that can be sustained for a longer time.” He added that “If we delay too long, the economy will eventually overheat, causing inflation or some other problem. At some point, that would put us in the position of having to quickly reverse course to slow the economy. That risks stalling the expansion and setting us back into recession.”


Matthew Schiffgens
Federal Reserve Bank of San Francisco
(415) 974-3246


The Federal Reserve Bank of San Francisco, with branch offices in Los Angeles, Seattle, Salt Lake City, and Portland, and a cash processing office in Phoenix, provides wholesale banking services to financial institutions throughout the nine western states. As the nation’s central bank, the Federal Reserve System formulates monetary policy, serves as a bank regulator, administers certain consumer protection laws, and is fiscal agent for the U.S. government. Follow us on Twitter at twitter.com/sffed.