Comments from SF Fed President Williams to Reuters
- Fed should continue with gradual hikes for next two years
- Says he expects US rates to be about neutral after three more rate hikes
- Sees less need for forward guidance as rates near neutral
- Notion of 'accommodative' policy less relevant as rates rise
- Fed does 'not necessarily ' need to pause on hikes after hitting neutral
- If economy stays strong, rates could go above neutral for a period of time
Williams and Brainard in the past two days -- in two of the final comments before the FOMC -- have hinted at a change in forward guidance.
The current statement says: "The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation."
Taking that out may give the statement an more-hawkish balance.
At the same time, this is also guidance:
"The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run."
Taking that out would be seen as dovish.
