Fed's Williams: Not worried about inflation, Fed has proved it can reign it in

Author: Adam Button | Category: Central Banks

That's a dangerous line of thought

The issue isn't that the Fed doesn't have the tools to combat inflation (raising rates), it's that it won't have the political will when the time comes. It's always had the ability to hike, and yet we've had lots of periods of high inflation. Given how politicized the Fed has become, it will be tougher than ever to meaningfully hike.

Other comments:
  • We recognize there's a lot of downward pressure on inflation and we need to offset that
  • Once the economy is stronger, the Fed may reach a point where it is not necessarily growing the balance sheet
  • We're still in a very weak economy
  • Optimistic we will continue to see a pretty strong recovery this year and next

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