New York Federal Reserve President John Williams stated that model-based estimates of the U.S. neutral interest rate are lower than bond market expectations, casting doubt on the reliability of market projections.

"Bond markets are signaling a much higher neutral rate, but I take those estimates with a grain of salt, as they’ve often been unreliable in the past," Williams said Thursday during an event in Frankfurt, Germany.

Williams noted that current models estimate the neutral rate to be around 1%.

"Even if the neutral rate is higher, it doesn’t mean we can stop worrying about the lower bound on interest rates. I believe the era of low neutral rates isn’t over yet," he added.