Fed official suggests US could raise rates in June

With the US economy likely to reach full employment before the year’s end and inflation on track to rise to the Federal Reserve’s target, the US central bank could raise interest rates in its June meeting, a top Fed official said yesterday.

“I recognise that not everyone shares my rosy view, or even thinks that 2015 is a good year to take action”, San Francisco Fed president John Williams, a voting member this year on Fed policy, told a New York audience.

Williams stopped short of calling for a rate hike in June, saying the Fed will need to discuss the nearly two months’ worth of data since its last meeting in April.

However, he did suggest, as he has before, that he is increasingly worried about allowing the economy to overheat if interest rates are held near zero for too long.

“I see a safer course in a gradual increase, and that calls for starting a bit earlier”, said Williams, whose centrist views make him something of a bellwether for the consensus among Fed policymakers.

Williams reiterated his expectation that stronger economic growth for the rest of the year will help push the unemployment rate down to 5%, or even below, by the end of 2015.

And he downplayed concern over low inflation, saying the dampening effects of a stronger dollar and cheaper oil should have only a transitory impact on domestic prices.