MNI: Williams Favors Fed QE Taper Completion Before Rate Hikes

New York Fed President John Williams Monday said he prefers seeing an end to the process of drawing back on asset purchases before raising short-term interest rates.

"My own view is the simplest, natural way is to first do a taper or finish that then think about liftoff," he said. "That does seem to me the most straightforward way to do it and to communicate what we're doing."

"I do think we have some flexibility to avoid" an overlap of QE taper and interest rate hikes at the same time, Williams told reporters after a speech to a Bank of Israel and Center for Economic and Policy Research conference.

Some ex-Fed officials have told MNI that the central bank could begin to raise rates before QE taper ends.

"I still view it as taking your foot off the gas. It's not putting your foot on the brake," said Williams about taper. "That's kind of the natural way to do it because as long as we're buying assets, we are in a way adding monetary accommodation, so raising interest rates at the same time it's kind of a mixed signal."

Williams said he is very focused on the various subcategories of inflation but said the semiconductor issue "clearly isn't going to go away anytime soon."