Interest rate rise will not threaten recovery, Fed's Williams says

The Federal Reserve should raise interest rates sooner rather than later, according to the president of the central bank's San Francisco branch, while describing the split among the Fed's top officials as "significant".

John Williams told Reuters that the economy has shown enough signs of recovery so that interest rates should raised, after the US central bank left them steady at its policy meeting last week.

"It is getting harder and harder to justify interest rates being so incredibly low given where the U.S. economy is and where it is going," Williams said in an interview.

Despite last week's decision, some members of the policy-making board disagreed with the decision to maintain the so-called federal funds rate at 0.5%.

"I would support an interest rate increase," he said. "I think that the economy can handle that. I don't think that would stall, slow or derail the economic expansion."

Many signs indicate that the US economy is back on its feet again following the financial crisis eight years ago, with a low 4.9% level of unemployment being the key figure touted by Williams and other advocates of a hike.

Williams also gave his backing to Federal Reserve chairwoman Janet Yellen, who has been under pressure from dividing calls surrounding the rates issue.

"I know she fully understands the arguments on both sides," Williams said. "I think she's just the right person to get the right balance going forward."

With the close proximity of the US presidential election likely to have a significant impact on markets, the Fed are unlikely to raise interest rates in the next couple of months, but the policy meeting in December has been pointed out by various economists as the likely time for Yellen and the board to come to such a decision.