US Fed's Williams sees 'strong case' for Dec rate hike

San Francisco Fed President John Williams speaking at the 2015 Symposium on Asian Banking and Finance on May 28, 2015.
San Francisco Fed President John Williams speaking at the 2015 Symposium on Asian Banking and Finance on May 28, 2015. PHOTO: MONETARY AUTHORITY OF SINGAPORE

WASHINGTON (Bloomberg) - If strong data on the US economy persists there may be a strong case for a Federal Reserve interest rate increase in December, San Francisco Fed President John Williams said.

The US central bank's policy-setting Federal Open Market Committee will convene in Washington on Dec 15-16 to discuss the possible policy move. Most economists in a Bloomberg survey and traders of federal funds futures expect lift-off from near- zero, where the rate has been since 2008, at that meeting.

"Assuming that we continue to get good data on the economy, continue to get signs that we're moving closer to achieving our goals" and are gaining confidence that inflation will move back toward the Fed's 2 percent target, there's "a strong case that can be made in December to raise rates," Mr Williams said, speaking with reporters at the University of California at Berkeley on Saturday.

His comments come at a time when the Fed is trying to assess whether it has drawn close enough to accomplishing its dual mandate of maximum employment and price stability to raise interest rates.

"What I have said, and I still hold to this, is it was a close call," Mr Williams said of the bank's decision to hold rates steady in October - a meeting when a rate increase was thought by many Fed watchers to be in play.

Since then, "the data, I think, have been overall encouraging, especially on the labour market. The data show that the hiccup we saw in a couple of labour reports has reversed," he said.

Mr Williams said he didn't want to signal a "mechanical" pace of rate increases once lift-off occurs.

The US added 271,000 jobs in October, the most so far this year, and unemployment fell to 5 per cent, the lowest since 2008, Labor Department data showed.

Mr Williams also said that he sees signs of core inflation "having stabilised," and that it may even be starting to firm up.

Mr Williams is an FOMC voting member in 2015.