New York, New York — Reiterating that all policy decisions will be data-driven, John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco, said today that the economy’s solid footing convinced him that rates should be raised before inflation reaches the Fed’s 2 percent target.
“As I have made possibly overly-clear, the exact timing will be driven by the data. They may push us a little in one direction or the other, and there will be a lot of discussion and debate,” he said. “Every FOMC meeting is on the table. That’s what it means to be data dependent.”
Citing the lags between the implementation of monetary policy and its full effects, Williams said that failing to raise rates in time could require a dramatic rate-hike to reverse course. “The decision to raise rates is actually three decisions: Not just when, but how quickly and how high,” he said. “I see a safer course in a gradual increase, and that calls for starting a bit earlier.”
In the remarks, made to the New York Association for Business Economics, Williams said that despite the disappointing Q1 numbers, he continues to be encouraged by the economy’s underlying momentum. “My bottom line on the economy is: The fundamentals are sound.”
The Federal Reserve Bank of San Francisco (SF Fed) serves the public by promoting a healthy, sustainable economy, and supporting the nation’s financial and payment systems. With offices in Los Angeles, Seattle, Salt Lake City, Portland and Phoenix, the Bank serves the Twelfth Federal Reserve District, which includes one-fifth of the nation’s population and represents the world’s fourth-largest economy. As part of the nation’s central bank, the SF Fed informs monetary policy, regulates banks, administers certain consumer protection laws and acts as a financial partner to the U.S. government.