Fed’s Williams: Likely to start normalizing balance sheet this year
San Francisco Fed President Williams is out on the wires now, via MNI, making a scheduled speech on the monetary policy program.
Key Points:
US economy has reached a turning point from recovery to expansion
Neutral interest rate somewhat below 3%
Gradual rate hikes to sustain econ expansion
Likely to start normalizing balance sheet this yr
Have 'exceeded' full employment by 'fair amount'
Risk of overheating econ with very strong labor mkt transitory factors pulling down inflation 'waning'
Expect US unemployment rate to edge down and remain a little above 4pct through next year
Expect US inflation rate to hit fed 2pct goal sometime next year
US economy about as close to dual employment-price mandates as we've ever been
Fed balance sheet management will be widely telegraphed, gradual and boring
Fed will let b/sheet gradually shrink until holding no more securities than necessary, haven't settled on exact number
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
