There is a good chance unemployment will dip to 3.5 percent and inflation could go above the Federal Reserve's 2-percent target, San Francisco Fed President John Williams told CNBC Friday.
"I see the unemployment rate getting down to 3.5 percent. I see us maybe modestly overshooting our 2 percent inflation target," said Williams, who has been nominated to take over the top job at the New York Fed.
On Wednesday, the Fed held rates at a target of 1.5 to 1.75 percent. In its post-meeting statement, the central bank also indicated that inflation is beginning to creep higher and used the term "symmetric" when referring to its target.
"Inflation on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term," the statement said.
Williams said the central bank wanted to reinforce the fact that it thinks of 2 percent as the mid-point.
"From the beginning we've seen our inflation target being a symmetric one, where we want inflation on average to be 2 percent — sometimes above, sometimes below," he said in an interview with CNBC's Steve Liesman on "Power Lunch."
"I am personally comfortable with the fact that inflation may overshoot that 2 percent for a while," he added.