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The Federal Reserve may keep hiking rates San Franciso Fed President John Williams told Reuters after the strong jobs report Friday He said the Fed may lift interest rates beyond 'neutral' level.

Fed williams

Willams said the Federal Reserve doesn't necessarily have to pause once it raises interest rates to "neutral." A number of Fed officals, including Dallas Fed President Rob Kaplan and Atlanta Fed President Raphael Bostic, have suggested the Fed might want to pause when they (or if), get rates up to neutral.

Highlights

  • Fed should continue with gradual hikes for next two years 
  • Less need for forward guidance as rates near neutral
  • Notion of 'accommodative' policy less relevant as rates rise
  • Rates could go above neutral for a period of time

Williams said the Fed might decide to drive rates into restrictive territory if the economy remains strong and inflation is at or above the Fed's 2% target. It is fair to say "fed speak" has been double speak or banal at best lately but Williams comments are of interest as he is a voting member this year and will take over the leadership of the New York Fed later this month.

He expects that the Fed might roughly get to neutral after three more rate hikes.

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