ECB’s Williams: The outlook is uncertain and the FOMC must be data dependent

  • Inflation is moving towards 2%, expect further bumps
  • Fed has made considerable progress
  • Inflation to stand at 2.25-2.50% this year
  • Expects inflation to settle back to 2% next year
  • Expects US GDP to hit 2% ghis year
  • Job market remains strong
  • Housing very strong but doesn’t see sign of a bubble
  • Commercial real estate an area of concern, will take time to resolve
  • Fed forecasts rate cuts starting this year

There is no change in tone here after yesterday’s CPI but in February he said his inflation forecast was 2.00-2.25%. Now it’s 2.25-2.50%.

More from Williams:

  • There is a great deal of uncertainty over economy
  • US economy has benefited from positive supply shock.
  • Inflation fell faster than expected last year.
  • Progress on inflation has hit some bumps with recent data being disappointing.
  • Better to focus on trend for inflation
  • Doesn’t know exactly what lies ahead for monetary policy.
  • The economy is in a good place right now.
  • Monetary policy is well-positioned to achieve fed goals
  • Does not see a financial stability crisis from commercial real estate.

US stocks are seeing some further upside with the S&P index now projected to rise by 7.29 points and the Dow industrial average up 25.99 points. The NASDAQ index is leading the way with a gain of 73 points in premarket trading.

  • Fed working to make sure banks ready for discount window
  • Access to the discount window is important during times of stress
  • Banks should be ready for discount window before trouble arrives (the discount window was once thought as a lender of last resort place for banks to square their balances on a daily basis. The Fed used to shun banks from its use. Now they are saying that they encourage it more).

This article was written by Adam Button at Source