Interest rate hikes help limit financial risks, Fed's Williams says
One of the top officials at the US central bank hailed the economy's performance and said further gradual rate hikes would also help to somewhat reduce the risk of imbalances in financial markets.
Speaking overnight from Bali, ahead of the start of the International Monetary Fund and World Bank's annual meetings, the head of the Federal Reserve bank of New York, John Williams, said the main reason for tightening monetary policy was how well the economy was doing in terms of meeting rate-setters' goals.
Normalising policy also had benefits in terms of financial risks.
"But I would also add that the normalisation of monetary policy in terms of interest rates does have an added benefit in terms of financial risks," he said, according to Bloomberg.
Williams also repeated that further "gradual" rate hikes were the best course to follow in order to achieve the Fed's dual goals of 'full employment' and stable inflation.
Nevertheless, the policymaker pointed to microeconomic studies of the labour market which suggested that the US economy might in fact be able to sustain a lower rate of unemployment, without stoking undue inflationary pressures, than had typically been thought possible.
He reportedly also brushed-off the impact from the ongoing trade war between China and the US, explaining that while it did add to the level of uncertainty for businesses, its effects had not yet shown-up in the official data on hiring and investment.