Fed Could Raise Rates Again This Year, Says Williams

By Brian Blackstone Features Dow Jones Newswires

Federal Reserve Bank of San Francisco President John Williams on Friday said he expects the Fed to continue raising interest rates gradually, and that this could include another increase by the end of this year.

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In a briefing with reporters in Zurich, where Mr. Williams was attending a conference held by the Swiss central bank, he said inflation in the U.S. should rise toward the Fed's 2% target over the next two years. U.S. inflation has undershot the Fed's target recently with its preferred annual gauge excluding volatile food and energy categories at 1.4% in July.

"My own view is that it has been not that baffling," Mr. Williams said, referring to low inflation. He noted that prices in some sectors such as health care and cellular services have been hit by downward movements, and that prices typically reflecting developments in the economy have been rising.

"With a strong economy, history teaches us that inflation tends to move up," he said.

Mr. Williams comments came two days after the Fed kept its key policy rate unchanged and said it would begin shrinking its portfolio of bonds next month.

Write to Brian Blackstone at brian.blackstone@wsj.com

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(END) Dow Jones Newswires

September 22, 2017 07:55 ET (11:55 GMT)