-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
Commodities
Real-time insight of oil & gas markets
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Chart Packs -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessREPEAT: Fed's Williams: 1 More Rate Hike This Yr; 3 Next Yr
Repeats Story Initially Transmitted at 22:16 GMT Aug 2/18:16 EST Aug 2
--September Good Time to Start Paring Back Reinvestment
--Underlying Inflation Trends Positive; See Hitting 2% Goal
--Running Economy Too Hot For Too Long Creates Risks
By Jean Yung
LAS VEGAS (MNI) - Despite expressing his frustration with inflation, San
Francisco Federal Reserve Bank President John Williams said Wednesday the data
has not prompted him to change his view on the appropriate path of monetary
policy in the near term.
He still thinks it makes sense to raise the Fed's benchmark interest rate
by another 25 basis points by the end of the year to a 1.25% to 1.50% target
range and begin reducing the central bank's balance sheet at the September
Federal Open Market Committee meeting.
"I think the basic path that was laid out in the median dots in the (June)
economic projections still makes sense to me," Williams told reporters after
speaking to the Economic Club of Las Vegas.
"Maybe one more increase this year, something like three increases next
year is appropriate given that our labor market is as strong as it is, given I
expect inflation to be moving back to 2%," he said. "So I'm comfortable with
that, but the exact timing will depend on how the economic outlook evolves."
The bigger issue for the San Francisco Fed chief is the very low level of
the longer run real neutral rate of interest, or r-star, an area of research in
which he specializes. He estimates that rate -- at which monetary policy is
neither accommodative nor stimulative -- to be currently at around 0.5%, or 2.5%
factoring in inflation.
"We're kind of halfway there already," he said. "So even for someone like
me who is optimistic about inflation moving back, I still don't see the need to
raise rates quickly because we don't have that long to go to get to a neutral
interest rate."
The economy is currently "in a good place," said Williams, who does not
vote this year on the rate-setting FOMC.
The unemployment rate, currently at 4.4%, is below his estimate of its
longer run natural rate of 4.75% and could fall to as low as 4.1% by the end of
the year, he said.
"I just think we don't want to let this go too long because eventually
inflation pressures will emerge at some point," he said.
"I do want to see inflation move up a little bit," but "if job growth
continues at this 180,000 number, we're going to see unemployment just going
further and further below and that will create risks," Williams said.
He repeated the FOMC and Chair Janet Yellen's view that one-off factors
like cellphone plan prices have held down inflation so far this year. The core
personal consumption expenditures price index rose 1.5% in June from a year
earlier.
He's "getting a little frustrated with inflation refusing to come up to 2%
as quickly as hoped," he said. "Still I think underlying inflation trends are
positive."
Overall for businesses, there is a sense that the economy is doing well,
Williams said, and that is true with or without the prospect of a fiscal
stimulus from the Trump administration or Congress via tax cuts or looser
regulation.
Lawmakers have yet to work out a plan to raise the U.S. debt ceiling, and
the deadline for doing so is set to come around the time when the FOMC will
likely begin to reduce reinvestment in Treasuries in October.
But Williams said he is "hopeful that we will find a way to resolve this
uncertainty around the debt ceiling issue in a timely manner."
Depending on what happens and how data comes in, the Fed also "has the
ability to adapt or be flexible about what's going on," he said.
--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.