A Jon Hilsenrath interview with head of the San Francisco Federal Reserve in the Wall Street Journal
San Francisco Fed's Williams Sees Rate Increase 'This Year' If Risks Dissipate
John Williams seems on the fence, and his views tend to reflect the center of thinking inside the Fed
The headline to the article, along with the sub-header pretty much says it all. The article may be gated, but if not, more at the link.
"All of the data that we have had up until now has been, I think, encouraging. It has been about as good, or better, than I was expecting, in terms of the U.S. economy," Mr. Williams said. "But there are some pretty significant-and I would say have now grown larger-headwinds that have developed."
On employment:
"We're close to full employment."
On inflation:
"Waiting until we're close enough to dance with 2% [inflation] means the very real risk of having to dramatically raise rates to reverse course, which could destabilize markets and potentially derail the recovery. I see a safer course in starting sooner and proceeding more gradually," he said in a June speech
What are the headwinds?
The change in financial conditions since the July Fed meeting, in the form of falling stock prices and a rising dollar, "have been pretty big," he said. "It's not the case that nothing has changed since our last [policy] meeting."
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Back in the day there was no transparency from the Federal Reserve like this. If one thing this increase in transparency has shown us is that a lot of the officials are about as clued in (or, the opposite) as the rest of us. That's not a criticism.
