In an interview with Bloomberg’s Kathleen Hays and Vonnie Quinn, Federal Reserve Bank of San Francisco/CA President Dr. John Williams said the Fed is getting closer to normalization, needs to weigh pros/cons for right timing on lift-off. Dr. Williams said June would be a good, responsible starting point to consider lift-off.
Fed President Dr. John Williams told the Bloomberg Radio hosts:
- ‘Patient’ was natural progression for Fed.
- ‘Patient’ means no move in next couple meetings.
- Monetary policy is data dependent.
- Job growth stronger than he expected.
- Low inflation is negative.
- Inflation will stay low for some time.
- Monetary policy acts with a lag.
- Market views of lift-off timing relatively reasonable.
- Inflation expectations well anchored at 2%.
- Wage growth to pick up as economy gets stronger.
- Fed has plenty of tools if inflation disappoints.
- Fed could delay lift-off if inflation stays too low.
- Increase in supply of oil big factor in price drop.
- Oil supply shock is positive for world economy.
- Drop in oil process is ‘huge windfall’ for consumers.
- Fall in oil prices will boost consumer spending.
- Oil prices don’t affect underlying inflation.
- Ricks to U.S. economy are all from abroad.
- U.S. economy in a ‘very good place’ domestically.
- Sees GDP Growing 2.5% to 3% next year.
- Sees unemployment at 5.25% at end of next year.
- Drop is oil prices very big plus for U.S. next year.
- U.S. can grow above trend with weak global growth.
- Global conditions are part of Fed’s outlook.
- Housing is still the big question mark for U.S.
- Sees some signs wage growth picking up.
- Expects wage growth to pick up in coming quarters.
- Looks forward to day when monetary policy is ‘boring’.
- Core inflation will be below 2% in 2015.
- Core inflation will likely be below 2% at lift-off.
