The President of San Francisco Reserve Bank, John C. Williams stated that he foresees a possible scenario where interest rates increase as much as three times this but see four hikes as ideal if only the U.S economy experiences an abrupt increase.
Speaking outside the forum organized by the Bank of Korea cited in Seoul, Williams pointed out that there is a possibility for unexpected economic occurrences, and the issue lies in the fact that ascertains if the economy is boosting. He said that the hiking would end below three percent and undesirable spillovers to rising economy will be reduced as the Fed will embark on its rate increase in a clear way. Consequently, the move will end in three percent or a little below that.
Rates were raised by the Fed in March to a high level, making it the third time since the recession and financial crisis between 2007 and 2009. Fed officials view a possible scenario where two or more hikes come up before the year runs out, and a 25-basis-point increase in the later part of this month – between 1 and 1.25 percent.
According to Williams, he doubts if fiscal policies could make a positive impact on the U.S. economy this year, but may be effective in 2018 and 2019. Speaking further, Williams said that although the economy of the U.S. is moving fine, the inflation going below the Fed’s 2 percent aim is not a nice one to the monetary policy.
Recording the poorest reading since 2015, Prices apart from energy and food in the Fed’s inflation gauge went up to 1.5 percent in April.
Despite the current economic situation, Fed officials have reiterated their confidence that a low rate of unemployment will make for the lift of inflation necessary for the target of the Central Bank in years to come.