LOS ANGELES (Reuters) - San Francisco Federal Reserve Bank President John Williams on Friday stood by the U.S. central bank’s guidance for gradual rate hikes ahead, saying that the economic outlook has not fundamentally changed from when that guidance was issued.
Fed officials have said since late last year that they expect three rate hikes to be appropriate for 2018. Wall Street, initially doubtful, has gradually come to believe in that guidance, but since a report earlier this month showing hourly wages rose in January at a sizzling 2.9 percent pace, some economists have begun to price in even faster rate hikes.
Williams said that if inflation comes in stronger than he expects, he would reassess his rate-hike outlook. But for now, the guidance stands, he said: The economy has not fundamentally shifted into a higher gear due to the recent U.S. tax cuts or other factors.
“I think the U.S. economy is doing really well,” Williams said at Town Hall Los Angeles, and that continued gradual rate hikes are needed to keep it from overheating.
Reporting by Ann Saphir; Editing by Chizu Nomiyama and Jonathan Oatis