San Francisco Fed President John Williams said Thursday that at least two interest-rate hikes this year is the "right course" so long as the U.S. economy continues to grow, businesses add jobs, and inflation picks up as he expects.
"If the U.S. economy continues to add jobs at the pace we're seeing, if inflation continues to improve, then clearly we should be raising rates gradually," Williams told Fox Business Network, according to excerpts provided to Reuters. Asked if the Fed should raise rates two times this year, he said, "I do think that's the right course," as long as data comes in as expected.
The Fed raised its benchmark policy rate in December, the first increase in nearly a decade, to between 0.25 percent to 0.5 percent. But ever since, the Fed has left rates there amid worries that slowing global growth and volatile financial markets could undercut the U.S. recovery.
Fed policymakers debated last month whether rates could be raised as soon April, but most felt that persistent global risks argued for caution on raising rates at home, according to minutes of the meeting released on Wednesday.
U.s. unemployment last month ticked up to a still-low 5 percent as more American poured back into the labor force, lured by the promise of a stronger job market. Inflation, while still below the Fed's 2-percent target, is showing signs of rising, Williams said on Thursday.
But "we obviously are cognizant that globally, economic growth is slowing, and that has repercussions in the U.S," Williams said. "(Uncertainty) about global growth seems to have stepped down a bit, but it is an important factor affecting the U.S. economic outlook and monetary policy.
Most Fed officials agree with Williams that the Fed should probably raise rates twice this year.
That is just half the pace policymakers saw back in December. Traders of contracts tied to the Fed's policy rate, however, are not even convinced the Fed will raise the rate even once by December.