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Talking Points:

  • SF Fed President Williams still expects to raise rates this year
  • Williams: Seeing some signs of domestic inflation picking up
  • US Dollar little-changed despite Williams’ hawkish rhetoric

San Francisco Fed President John Williams leaned towards the hawkish side of the spectrum in a speech today, saying that he still believes interest rates can rise in 2015. The priced-in probability for a hike this year has plunged after last week’s disappointing set of US payrolls figures showed the economy added just 142,000 jobs in September.

Williams said that the economy needs “at most” 100,000 new jobs per month. He added that he is bullish on China and sees some signs of domestic inflation picking up in the US. The SF Fed branch chief also speculated that when the FOMC does decide to begin removing stimulus, it will be the “most gradual tightening in [the central bank’s] history.”

Highlights from Federal Reserve President John Williams October 6th speech:

  • Sees Federal Reserve interest rate liftoff in 2015
  • This will be the most gradual tightening in Fed history
  • Williams: bullish on China
  • Normal market volatility does not bother him
  • Expects markets to be effected as Fed liftoff gets closer
  • It’s ok if markets not convinced of rate liftoff timing
  • US needs “at most” 100,000 new jobs a month
  • Seeing some signs of domestic inflation pick-up
  • Not worried about inflation, may be other imbalances

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US Dollar Unimpressed as Fed’s Williams Talks Up 2015 Rate Hike

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original source
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