Fed's Williams sees limited bump from Trump fiscal policies

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# 13:43
26 May 2017

San Francisco Federal Reserve President John Williams said he is spending more time thinking about how fiscal policies under U.S. President Donald Trump could impact the economy, and so far he sees small short-term gains and little for the longer term, Reuters reported.

 

Over the next several months, Williams told Reuters on Thursday, fiscal policy will not matter much to monetary policy. With U.S. unemployment at 4.4 percent and job creation nearly twice what is needed to provide jobs for new entrants to the workforce, the economy is running "somewhat hot," he said.

 

The best way to sustain the economy's momentum, he said, is to slow the economy a bit by gradually raising rates.

 

But because inflation remains below the Fed's 2-percent target, and has softened lately, there is no pressure to do more than the two further rate hikes this year that he and most other Fed officials expect, Williams said.

 

The Fed raised its benchmark rate in March for only the third time since the Great Recession, and Fed Chair Janet Yellen has said the current range of 0.75 percent to 1 percent is still delivering an accommodative boost to the economy.


 

 

 

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