San Francisco Fed Williams supports September rate hike. He joined the chorus of his colleagues who think that the US economy is ready for the Fed’s next move. What are the reasons behind such stance?
19 August, AtoZForex – San Francisco Federal Reserve Bank President John Williams along with his colleagues indicated support for a US interest rate hike in coming months. Waiting too long might be costly for the economy, he thinks.
Fed Williams supports September rate hike: why?
It seems like all in all Fed Williams supports September rate hike. Though he said he is in no hurry to raise the rates, Mr. Williams warns that the economy could suffer and overheat if the rates are kept low for too long. Mr. Williams does not have a vote in Fed policy issues this year. However, his opinion is viewed as influential for the policy-setting committee due to his long time relationship with current Fed Chair Janet Yellen and his research-driven style. Mr. Williams stated in one of his interviews:
“I definitely think September should be. <…> I think that makes sense given where the economy is.”
Uncertainty about the rates hikes is acceptable
William Dudley, the New York Fed President And Dennis Lockhart, the Atlanta Fed President have also expressed the opinion that the US economy is in good shape and that Federal Reserve should restart the run of gradual rate hikes. Fed began to carry out rate hikes last December but stopped due to the market turmoil and potential negative effects of the slowdown in Europe and China.
Mr. Williams on Thursday told the reporters that monetary policy must for now be focused on current goals which include a target of 2% inflation and full employment. He thinks that Fed has met the second goal and is close to achieving the first one. Williams think that the uncertainty about the exact date when the Fed will raise the rates is acceptable in current situation:
“What worries me a little bit more is that there is a view out there no matter what the Fed says they are not going to raise rates for a year or two. That’s inconsistent with my understanding of the economy and also the strategy that we’ve laid out.”
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