|
Waiting too long to raise rates, he said, could end up fueling
inflation or bubbles and force the Fed to implement sharp rate
hikes that could choke economic growth. Next year, he added, it
would "make sense" for the Fed to raise rates a few more times.
But he stopped short of calling for a rate rise next month, at a
meeting that takes place just one week before the U.S.
presidential election.
With the U.S. economy "essentially at" full employment and
inflation "pretty darn close" to the Fed's 2-percent inflation
goal, "it makes sense to get back to a pace of gradual rate
increases, preferably sooner rather than later," Williams told
the Federal Home Loan Bank of San Francisco member conference.
By December, he told reporters afterwards, there would be more
data to make a decision on rate rises, and with economic data
already showing that wages and inflation are rising, there is no
fundamental reason policymakers would not be able to come to a
consensus then.
"In arguing for a gradual increase in interest rates, I’m not
trying to stall the economic expansion," said Williams, who will
next vote on rate policy next year. "It’s just the opposite: My
aim is to keep it on a sound footing so that it can be sustained
for a long time."
Williams said he did not disagree with Fed Chair Janet Yellen,
who last week suggested that running a "high pressure economy"
may be the best way to reverse damage from the financial crisis.
Williams told reporters that he had no problem with allowing the
economy to run somewhat hot, but is only worried that if
unemployment, now at 5 percent, is able to fall as low as 4
percent, it could require the Fed to pivot quickly, causing a
recession.
Most Fed officials believe it will be appropriate to raise rates
before the end of the year.
The Fed last raised rates in December, and currently targets a
range of 0.25 percent to 0.5 percent for the overnight lending
rate between banks, its main policy lever.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
|
