San Francisco Fed President Williams says Fed could reduce pace of asset purchases as early as this summer, end them by year’s end:

  • Labor market has improved considerably since QE3
  • Needs to see further gains in jobs market before he will be convinced QE should end
  • Doesn’t see unemployment falling below 6.5% until mid-2015
  • Sees unemployment just below 7.5% at year end
  • Decline in inflation is temporary but will stay below 2% over next few years
  • Confident Fed will succeed in eventual exit of QE

Not that he says ‘end’ not ‘diminish’. The US dollar is stronger on the comments because of that and because he’s not worried about disinflation and talking about tapering.