Fed's Williams: Demand is far exceeding supply, monetary policy can bring it back in line with supply

NY Fed President and influential FOMC member John Williams said on Monday that demand in the US economy far exceeds supply and that the Fed's monetary policy can bring it back in line with supply, report Reuters. 

Additional Remarks: 

"We're seeing inflation in a broad set of goods."

"Without price stability, you're not going to achieve the growth and employment opportunities you would otherwise."

"We are starting to see some impact of inflation on spending behavior."

"The MBS cap of $35 bln is a 'big number'."

"I do not expect to hit the MBS cap each month."

"Right now we're not focused on the possible sale of MBS, but it is an option we could consider in the future."

"MBS sales in the future might be an option to bring the balance sheet more closely to long-run goal of mostly treasuries."

"The balance sheet reduction itself will occur over the next few years."

"The balance sheet will still be larger than it was 10 years ago."

"The best position to be is to own primarily treasuries and we're not anywhere near that."

"Buying both MBS and treasuries have had a stronger effect on overall financial conditions than buying just treasuries."

"Buying MBS has proven to be a powerful tool."

"We've indicated clearly that our primary tool is the federal funds rate."

"We'd need to understand what the effects of MBS sales would be and consider market functioning carefully."

"MBS have a lot of desirable features and there is historically strong demand for those."

"The housing market now is the product of a 'unique' set of circumstances."

"We are not seeing a lot of risk-taking by mortgage lenders."

"We're seeing high rents as well as high home prices."

"We need more housing supply to meet the demand."

"We are seeing increases in rents that we had not seen before."

"Right now we have an enormous number of job openings."