Federal Reserve Vice Chairman Stanley Fischer said political and economic uncertainty has contributed to slow economic growth in the U.S. and around the world.
“Uncertainty about the outlook for government policy in health care, regulation, taxes, and trade can cause firms to delay projects until the policy environment clarifies,” Fischer said in the text of a speech he’s scheduled to deliver Monday in Brazil.
Fischer’s comments were part of a wider diagnosis of why interest rates have remained so low globally. The phenomenon, he said, isn’t primarily the result of the current economic cycle, but is mostly driven by longer-term trends found in several developed countries.
They include slow trend growth, an aging population and weak levels of investment, he said, all of which pre-date the financial crisis and the Great Recession.
The Fed’s benchmark policy rate stands in a range of 1% to 1.25%, low by historical standards and especially unusual considering that unemployment sat at 4.3% in May, a 16-year low.
Interest rates also remain low at the European Central Bank and the Bank of Japan, both of which are still engaged in stimulus efforts through bond purchases.