Federal Reserve

Fed's Williams: Don't 'rule out' more than three rate hikes this year

Fed's Williams: Should not rule out more than 3 hikes this year

Another Federal Reserve official went on the record Wednesday saying that interest rates could go up faster than expected this year.

San Francisco Fed President John Williams said his central bank colleagues should not "rule out more than three increases total for this year." The Fed already approved one hike earlier this month, with forecasts anticipating two more before the year ends.

Williams' remarks were somewhat less hawkish than those from Boston's Eric Rosengren earlier in the day, but they carried the same basic theme: the recovery is in full bloom, and the Fed needs to keep a handle on growth.

"What a difference four years makes. We're now very close to reaching the Fed's dual mandate goals of maximum employment and price stability," Williams said, according to prepared remarks he was delivering to the Forecasters Club in New York. "In fact, if you do the math, we are about as close to these goals as we've ever been."

Williams is a non-voting member of the Federal Open Market Committee, but he does participate in deliberations that lead to policy.

John Williams
Noah Berger | Bloomberg | Getty Images

His remarks come amid expectations for higher economic growth this year and more aggressive fiscal policy in Washington. President Donald Trump has pledged an agenda of tax cuts, less regulation and increased infrastructure spending to lift the economy out of a slow growth pattern.

Williams said it's important for others to take the handoff from the Fed, which has been using historically loose monetary policy as stimulus. Supply-side issues such as spurring labor growth and business investment is beyond the Fed's reach, he said.

"Unshackling the economy from these supply-side restraints is instead the purview of things like federal fiscal policy, state and local legislative actions, philanthropy, business investment, public-private partnerships, etc.," he said.

"The public and private decision-makers who work in these realms have it within their toolkits to spark growth and innovation, if they so choose to invest in priorities like education, training, safer and healthy neighborhoods, and infrastructure," he added.