Q&A from Fed's Williams
- uncertainty around trade is affecting business leaders, tendency is to hold off on investment
- there are more uncertainties run economic outlook, especially from trade
- I do follow market views: we have our own views
- doesn't bother me if market, Fed views differ
- should think about right policy for strong growth
- Baseline good; need to be prepared to adjust views
- inflation has become a little softer this year
- We've been seeing strong economic and job growth
- economy been on strong trajectory coming into 2Q
- 1H GDP still likely to be well above trend growth
- There are more uncertainties today
- inversion of yield curve is not an "oracle" of chance of recession
- his base case for US GDP growth is 2.25% to 2.5% in 2019
- I won't put a lot of conviction on above trend growth
- may need to keep rates saying, may need to adjust them
- coming months will get more clarity about trade, China growth outlook
- there is a shift from tailwind of fiscal policies to a headwind of trade, tariff issues
- believes rates are currently at neutral
- Markets are speaking pretty loudly on where interest rate should go
- Market views are informative but they do not force the Fed's hands
- inverted yield curve does not require Fed rate cut
- 2% should be an average over time
The comments from William's did not endorse a cut in rates (the markets are speaking loudly for a cut, but they do not force the Fed's hand), but did not necessarily rule it out. He seems content to wait things out. In that respect, September seems like it is more his focus dependent on data.
William's is a voting member on the Fed.
