Fed's Williams Sees Gradual Pace Of Tightening

MarketWatch Pulse

The pace of upcoming rate hikes should be "pretty gradual" over the next few years, said John Williams, the president of the San Francisco Fed, on Monday. In a sit down with reporters on the sidelines of the American Economic Association annual meeting, Williams said his preference for a slow tightening pace reflects an economy that needs accommodative monetary policy to have strong growth. Another factor is that, over many years, longer-term real interest rates globally are likely to be much lower than they were in the 1980s and 1990s, he added. Williams said he thinks a rate hike this year will be appropriate, but added he is in "no rush" to tighten. He said that mid-2015 is a reasonable guess of when the Fed will first ask "should we do it now or wait a little longer." Williams, a close ally of Fed Chairwoman Janet Yellen, will be a voting member of the Fed policy committee this year.

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