US San Francisco Fed head Williams with a scheduled speech 22 Sept

  • Fed funds rate of around 2.5% the new normal, will be a primary tool in future
  • we have been as close as we have ever been in my career re inflation and employment goals
  • expects inflation to reach 2% target in next 2 years
  • market is understanding what we are trying to do
  • the word of the day is normalisation
  • fully support normalisation of balance sheet
  • US economy in very strong shape
  • could be one more rate hike this year and three next year based on how economy develops
  • will take around 4 years for balance sheet to get to new normal level
  • we have quite a bit of room to reduce interest rates in response to negative economic developments if needed

That's the key to these intended hikes both in the UK and EU imho. Create some wiggle room to cut when the proverbial hits the fan in future.

USD not doing much on the comments.

Williams- Happy that markets understand what the Fed want