A liftoff from near-zero interest rates will likely happen this year, and delaying a hike for too long poses risks, a top Federal Reserve official said Friday.
San Francisco Federal Reserve President John Williams believes the U.S. central bank should raise rates twice this year if economic data meet expectations, he told reporters. However, Williams remains in "wait-and-see mode" on interest rate policy, he noted in earlier prepared remarks following the The National Bureau of Economic Research (NBER) East Asia Seminar on Economics.
Williams and other members of the Fed's policy-making committee have repeatedly stressed a rate decision is dependent on economic data including jobs and inflation.
After this week's policy meeting, the U.S. central bank left interest rates unchanged, noting the economy was "expanding moderately." On Friday, Williams said he sees "solid improvement" in the labor market as wage growth starts to ramp up.
That outlook comes after the U.S. economy created a better-than-expected 288,000 jobs in May, as wages rose 8 cents per hour.
Williams also expects to see signs that inflation is pushing higher. A weakening U.S. dollar and steadying oil prices should boost inflation, he said Friday.
However, Williams remains unconvinced that inflation has hit bottom. The Fed has a 2 percent inflation target.