By Shayndi Raice
The Federal Reserve will be able to maintain its independence during the Trump administration, Federal Reserve Bank of San Francisco President John Williams said Wednesday.
Speaking at an event in San Francisco on the day after the presidential election, Mr. Williams said the Fed remains focused on the economy and isn't a partisan political body.
During his more than 20 years in the Federal Reserve system, he has worked with appointees from both Republican and Democratic administrations, Mr. Williams said.
He said he wouldn't speculate on whom President-elect Donald Trump would appoint to fill two vacant seats on the Federal Reserve Board of Governors.
Government spending decided by the president and Congress is just one data point the central bank takes into account when making monetary policy decisions, Mr. Williams said.
"Fiscal policy is only one of many things that affect the U.S. economy," he said. "It's on the list of things we study," but the Fed also looks to Europe and China to determine its next policy steps, he said.
"It's all into this funnel of what does this mean for maximum employment and what does it mean for price stability," Mr. Williams said.
Mr. Williams, who isn't a voting member this year of Fed's interest-rate setting Federal Open Market Committee, reiterated that he believes the U.S. economy is strong enough for gradually higher interest rates.
The central bank hasn't raised rates since December 2015, when it pushed up the target for its benchmark federal-funds rate to 0.25% to 0.5%.
The Fed, which has kept rates steady since, has been mostly expected to raise rates a quarter percentage point at its next meeting, on Dec. 13-14.
The Fed's statement after its November meeting, that the case for higher interest rates had strengthened, was still relevant today, Mr. Williams said. But he said that like with all meetings, the Fed would need to assess all relevant economic data before making a decision on raising rates at the next meeting.
"The November statement accurately reflected where things were then but also continues to accurately reflect our economic goals," he said, speaking with reporters after the event.
Regarding added uncertainty after the election, Mr. Williams said, "There's always something out there. You have to make your best judgment."
While Mr. Williams said he believes the Fed's actions in the wake of the recession have helped the U.S. economy avoid much of the deflationary pressures economies in Europe or Japanare struggling with, he did say that he understood much of the election-cycle criticism of the Fed in light of the impact of the recession.
"In terms of criticism of the Fed and many parts of government, I view that as part of democracy," he said. "I think it makes sense that people are asking the question of what did we do right, what could we have done better. The fact that people are commenting or criticizing the Fed is part of a healthy society."
Mr. Williams said his view of the U.S. economy was that it had made great progress since the recession.
He also said he supports Chairwoman Janet Yellen's assessment that running the economy hot for some time might be beneficial.
"I do want the economy to be strong, hot if you will, even stronger than maybe the normal level," he said, adding that he would like to see the unemployment rate come down further and for inflation to rise.
But he also spoke of the dangers ofrapid economic growth and how that could cause asset bubbles or other imbalances. "We don't want it to be too hot for too long," he said.
Write to Shayndi Raice at email@example.com
(END) Dow Jones Newswires
November 10, 2016 00:25 ET (05:25 GMT)
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