The Federal Reserve can raise interest rates without threatening the U.S. economic recovery, a top Federal Reserve policymaker said on Tuesday, saying the central bank risks doing more harm by continued inaction.
"It is getting harder and harder to justify interest rates being so incredibly low given where the U.S. economy is and where it is going," San Francisco Federal Reserve Bank President John Williams said in an interview at his bank's headquarters.
"I would support an interest rate increase," he said. "I think that the economy can handle that. I don't think that would stall, slow or derail the economic expansion."
The U.S. central bank left rates steady at its policy meeting last week, but three policymakers dissented. Fed Chair Janet Yellen herself signaled that a hike could come by the end of the year, but said for now the economy still has "a little more room to run."
U.S. unemployment stands at 4.9 percent, near what many Fed officials believe represents a fully employed economy. While a further drop to perhaps 4.5 percent would deliver a healthy boost to inflation, anything lower risks overheating the economy, which could force the Fed to jack up rates and tip the economy into recession, Williams said.