Inflation will move toward 2% over next couple of years

SF Fed President Williams is on the newswires. He is speakig in Salt Lake City:

  • Balance sheet unwind will tend to push up long-term rates
  • gradual rate hikes over next two years appropriate
  • economy to continue on same moderate growth path
  • hurricanes to hit employment, output in the near-term
  • US has exceeded its full employment mark
  • inflation will move to 2% goal over next couple years
  • should take about four years to shrink the balance sheet
  • rates will need to rise to new normal of 2.5%

The comments are consistent with prior comments from Williams.

Williams is an alternate member on the current FOMC board (he did not vote at the last meeting), and will be a full voting member in 2018.