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Fed's Williams says U.S. economy in good shape, wants rate hike

07 September 2016 10:00 (UTC +04:00)

Baku - APA-Economics. A top Federal Reserve official on Tuesday repeated his call for gradual interest rate hikes, evidently unfazed by a slowdown in U.S. job gains and sluggishness in the services sector that now has traders betting against any rate hike at all this year, Reuters reported.

It "makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later," San Francisco Fed President John Williams said in remarks prepared for delivery to the Hayek Group.

Williams said the economy was in "good shape," and he forecast unemployment, now at 4.9 percent, to fall to 4.5 percent in the coming year and inflation to rise to the Fed's 2 percent target in the next year or two.

The Fed could raise its 2 percent inflation target to 3 percent or even 4 percent, or shift away from inflation targeting altogether and instead target a nominal level of national economic output, Williams said.

He said that because it will take time to figure out which approach will work best when faced with future downturns, the Fed needs to get cracking.