San Francisco Fed President Williams

  • Inflation is moving towards our 2% target
  • Fed is very close to achieving employment and inflation goals
  • Fed needs to hike gradually to avoid a too-hot economy

Hawkish talk from Williams could help put a bid under the US dollar.

That said, a 'too hot' economy is a pipedream. The headlines hit a few minutes earlier than expected.

Here is what Williams said on Feb 3:

"From a risk management point of view, there's an argument to move sooner, rather than wait," he said in an interview with Bloomberg.

"There's some optionality to moving sooner rather than waiting this year," he said. "Three rate increases, like I said, it's a reasonable guess, a reasonable perspective to have as a base case. But honestly, I think there's a lot of potential that this economy is going to perhaps get more of a boost than the base case."

The 'serious consideration' is a step up and looks deliberate but it's not a huge shift. The US dollar gained about 10 pips across the board.