NEW YORK (Reuters) - With the U.S. economy having now "largely attained" a full recovery from recession, the Federal Reserve can raise interest rates three or more times this year, a centrist Fed policymaker said on Wednesday.
San Francisco Fed President John Williams, who largely repeated his view that the U.S. central bank should continue tightening policy gradually, said the main obstacles to raising economic output are now largely outside of the Fed's realm of influence: the slow growth in new workers in the labor market and in their productivity on the job.
He said such supply-side impediments to pushing overall economic growth above its current 2-percent rate are for lawmakers and business leaders to tackle, not the Federal Reserve.
Lifting rates gradually "prevents the economy from overheating... I would not rule out more than three increases total for this year," Williams told an economists' club in New York.
"With an economy at full employment, inflation nearing the Fed's 2 percent goal, and the expansion now in its eighth year, the data have spoken and the message is clear: We've largely attained the hard-sought recovery we've been after for the past nine years," added Williams, who is close to Fed Chair Janet Yellen and who regains a vote on the Fed's policy committee next year under a rotation.
Earlier this month the Fed lifted rates a notch, its third tightening since the 2007-2009 financial crisis and recession. Forecasts from Fed officials suggest a median of two more hikes are planned before year end.
Williams expects economic growth of around 1.75 percent this year and next, a bit below his colleagues, and for inflation to hit 2 percent in the next year or so.
Reporting by Jonathan Spicer; Editing by Chizu Nomiyama