SF Fed’s Williams: ‘Rate hike likely by mid-2015’
SF Fed President John C. Williams offered an upbeat view of the economy, saying a rate hike is likely by mid-2015 “assuming the economy progresses as anticipated.”
“The data will drive our decision—not just how close we are to our goals, but how quickly they come into sight,” he said in an Oct. 9 speech in Las Vegas. “And, assuming the economy progresses as anticipated, rates will likely increase relatively gradually.”
“If the economy or inflation heat up faster than I expect, we should lift rates sooner,” he added. “If progress on these fronts slows, we should wait longer.”
Williams stressed that “monetary policy will remain accommodative for some time, because we’re still quite a way from our goals.”
He elaborated on this point in an interview with Reuters, saying “if inflation isn’t moving above 1.5 (percent) and we get stuck into that gear, that would argue for a later liftoff.”
Still, Williams stressed in an interview with the Wall Street Journal, that “We still have very good, solid momentum in terms of economic growth. … I see unemployment continuing to edge down, employment growth continuing to be good. On the inflation front, I still view inflation on a medium-term trend moving back to 2%.”
Williams noted in Las Vegas that “in some places, the recession is fading into memory; in others, the wounds are still raw.”
“Taking into account this diversity in experience, overall, the economy’s getting better all the time, as the song goes,” he added. “But we still have a way to go to get to full health.”
The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.