Fed could dial back on rate hike should economic data worsen, Williams says

The US economy has good momentum behind it and should the economic information worsen following a rate hike the central bank could dial back on that tightening, a top Fed official told Bloomberg TV.

Speaking on Tuesday morning, San Francisco Federal Reserve president John Williams said analysts’ dividend opinions regarding whether the FOMC was at risk of ‘falling behind the curve’ or too much in a rush showed the central bank was getting it about right.

The central banker also pointed out how current levels of core inflation – with his preferred gauge being the Dallas Fed’s Trimmed Mean PCE rate of inflation – were running at 1.7%.

That was not inconsistent with the start of previous rate hike cycles, Williams said.

What matters is not when the Fed begins to raise interest rates but rather that the move comes when the economy is strong and enjoying good momentum.