SF Fed’s President Predicts Two Rate Increases this Year

San Francisco Federal Reserve President John Williams spoke with FOX Business Network’s (FBN) Peter Barnes about raising interest rates this year. Williams said, “I think, again, it’s going to be depending on the data. If the U.S. economy continues to add jobs at the pace we’re seeing, if inflation continues to improve, then clearly we should be raising rates gradually.” When asked whether he supports two rate increases this year, Williams said, “That’s my personal view.”

On whether we could see two more rate increases this year:

“Well, if you look at the projections that my colleagues and I put out there, you see a number of two, three, some four, some people have four rate increases — I think, again, it’s going to be depending on the data. If the U.S. economy continues to add jobs at the pace we’re seeing, if inflation continues to improve, then clearly we should be raising rates gradually in the way that people I think have written down their projections. Of course, we’ve got to — there are a lot of uncertainties out there, and we obviously are cognizant that globally, economic growth is slowing, and that has repercussions in the U.S.”

On foreseeing two or more rate increases this year:

“That’s my personal view, what I would expect to be appropriate policy, but again, we’ll see how the data come in. If they come in as I expect, I do think that’s the right course.”

On when the Federal Reserve will make its next move to raise rates:

“Well, as I always say, the policy decisions are data dependent, so I’ve been watching the data flow very carefully and what’s it mean for our outlook. Again, I’m pretty optimistic about achieving our goals, maximum employment, sometime soon. I think we’re very close. We’re at that goal. Inflation is still the one thing we need to see more progress on, but my own view is that with this solid improvement in nearing our goals, it is appropriate for us to gradually raise interest rates over the next few years and get them back to more normal levels. Now the exact decision, what meeting we’ll do that, will depend on the data, the analysis, and importantly, the discussion at the committee meeting and really seeing all the aspects around the economic outlook.”

On the economy:

“Sure. The economy, U.S. economy is doing quite well. We’re adding lots of jobs. We added 2.75 million jobs last year. We’re on pace to add another 2.5 million jobs this year. So I see the economy having a good trajectory going into this year. Now in terms of inflation, there’s been some good news there. We’ve had inflation blow our two percent target for the last several years. We’re seeing some signs that inflation’s picking up, and that’s a good thing. I’m hoping that that will continue.”

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