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 "Others' economic fates do not spell our own," Williams said in a
speech at the National University of Singapore on a trip to Asia.
"My view is essentially, let's just stay on track. Let's not get
sidelined by the noise and distraction commentary can sometimes
cause."
The U.S. central bank left interest rates unchanged two weeks ago
and signaled its cautiousness by forecasting two further rate hikes
this year, down from four at its December meeting, when the Fed
raised rates from near zero for the first time in almost a decade.
But Williams, who has been consistent in providing a more upbeat
assessment of the U.S. economy over the past few months, said he
expects the unemployment rate to fall to about 4.5 percent by late
2016 and for inflation to return to the Fed's 2 percent target over
the next two years.
"We're not quite where I'd like us to be, but recent developments
have been very encouraging and add to my confidence that we're on
course to reach our (inflation) goal," he said, citing an uptick in
oil prices and a stabilizing dollar.
Overall, the U.S. economy "keeps chugging ahead," he said.
Asked about the inflation outlook, Williams said there were some
encouraging signs in core inflation data.
"The last few months have actually been looking really good on CPI
and PCE prices and I do want that to continue," he said during an
audience Q&A session.
"If it continues for the next few months, I will be pushing forward
my inflation forecasts," Williams said.
"There is some upside risk that we'll hit our inflation target
sooner."
On the global front, where some of his colleagues argue that the
United States cannot uncouple itself from international economic and
financial developments, Williams stressed that forecasts for global
economic growth are far from dire.
The International Monetary Fund predicts about 3.5 percent global
GDP growth this year, down only one-half percentage point from a
year ago, he said.
"I don't see a looming global crisis," Williams said, adding that he
continues to think China will avoid a hard landing.
Two Fed policymakers signaled last week that another rate increase
could come as early as the Fed's next meeting on April 26-27.
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However, lackluster consumer spending and inflation data on Monday
curbed investor bets on when the next rate rise will be.
If the U.S. economy performs as well as it did last year, it will be
able to handle steady interest rate increases in 2016, Williams
said.
"If we have inflation moving clearly towards 2 percent, if the U.S.
economy continues to improve the way it did last year...I think the
economy could easily handle two or more (rate) increases this year,"
he told reporters.
U.S. interest rate futures currently suggest traders see a 12
percent chance of a rate hike next month, according to CME Group's
FedWatch.
As the global economy improves and policies normalise, there could
be pretty large moves in long-term bond yields over the next several
years, Williams said.
U.S. 10-year Treasury yields, now near 1.9 percent, could eventually
head up to around 4 percent to 4.5 percent, he said, adding that
this could have an effect on asset prices in general.
Fed Chair Janet Yellen may offer more hints on the central bank's
latest thinking when she speaks in New York later on Tuesday at
12:20 EDT/1620 GMT.
Williams is not a voting member of Fed's rate-setting committee this
year but participates in deliberations.
(Additionl reporting by Saeed Azhar; Editing by Diane Craft and Kim
Coghill)
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