NEW YORK, May 6 (Reuters) - A Federal Reserve governor said on Tuesday that weaker U.S. productivity and potential growth could point to a lower average federal funds rate over the medium-term horizon.
The federal funds rate is the U.S. central bank’s primary tool for conducting monetary policy. In the past it has averaged about 4 percent in nominal terms, or 2 percent in real terms.
Fed Governor Jeremy Stein said that, given longer-run factors like productivity, potential economic growth and savings rates, “I think you can make an argument that over some medium run those things ... point toward a qualitatively lower value than the historical average.”
Speaking at a bond traders dinner, he added it was unclear how long that might persist. (Reporting by Jonathan Spicer; Editing by Eric Walsh)