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Tuesday, May 12, 2015

Rate hike makes sense sometime later this year says Fed's Williams

Fed's John Williams on MNI

  • Will not raise rates at every meeting after initial lift off
  • Now the lift off will be 100% driven by an improving economic outlook
  • May need to run labour market a little hot to hit inflation goal
  • Removing patient was the last bridge to be crossed
  • All meetings including those not covered with press conferences are on the table
  • We are getting to a more normal kind of reaction function
Some repetition of the comments he made yesterday but he's highlighted his casual regard for inflation with the employment comment

More out now;
  • Says he's not worried about using interest rates to achieve the Fed's goals
  • Overnight reverse repo facility adds certainty to Fed's ability for raise FFR
  • Interest on reserves is enough to raise FFR to target
  • Does not expect fed to use overnight RR for long

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