NEW YORK, June 6 (Xinhua) -- Low inflation has become a pressing problem in developed economies, creating challenges for central banks in combating any possible economic downturn, New York Federal Reserve (Fed) President John Williams said Thursday.
"In the pre-2008 era, inflation was a major concern for the public and central banks alike," Williams said in prepared remarks to the Council on Foreign Relations in New York.
"While I will always be vigilant about inflation that's too high, inflation that's too low is now a more pressing problem," he said, adding that "slow recovery, persistently low inflation is a symptom of deeper problems afflicting advanced economies around the world."
He noted that longer life spans and slower population gains that hold back productivity and thus keep the United States and other developed economies in a low-growth pattern, driving interest rates down to very low levels.
"When interest rates are low, central banks don't have much room to maneuver to deal with a crisis," Williams said.
The U.S. Federal Reserve has a goal of keeping inflation near 2 percent, but the economy has been unable to consistently meet that goal.
According to the latest report by the U.S. Bureau of Economic Analysis, in the 12 months through April, the so-called core personal consumption expenditures (PCE) price index, a preferred inflation gauge by the Federal Reserve, was up 1.6 percent, below the central bank's target of 2 percent.
The senior Fed official's remarks came amid the markets' growing expectations on possible rate cuts in the near future by the Fed.
Federal Reserve Chairman Jerome Powell said Tuesday that the Fed is watching current economic developments and will do what it must to keep the near-record expansion going.
He said while the Fed does not know how or when the issues involving trade negotiations and other matters will be resolved, the central bank is closely monitoring the implications of these developments for the U.S. economic outlook.
The central bank released its latest beige book on Wednesday, saying the U.S. economy expanded at a "modest pace" overall from April to mid-May.
U.S. equities have rallied these days as investors grew more confident that the central bank will lower its benchmark interest rates to facilitate economic expansion.
