Fed's Williams: 'Not the time to think' about rate hikes

Yahoo Finance reported that New York Fed President John Williams said Thursday that the Federal Reserve is far from raising interest rates, adding that central bank policymakers have time to craft any forward guidance on future policy.

“This is not the time to think about liftoff or normalization,” Williams told Yahoo Finance in an exclusive interview.

Key notes

“We do have some time to think about how we should evolve that guidance as we go forward,” Williams said.

Williams had lukewarm enthusiasm for the idea, floating its use as a “potential tool” but said he would only want to rely on it if the Fed saw that existing communications were not “being as effective as we would like.”

‘We’ll get there over the next couple years’

Williams said his baseline expectation is still for the economy to see a “continued period of economic recovery.”

But he added that the economy remains in a “very deep hole” with the unemployment rate still at 11.1%.

“It’s a situation that changes, is in flux all the time,” Williams told Yahoo Finance. “But I'm confident that we'll get there over the next couple years and get this economy back full circle.”

“We're basically in there - not picking winners and losers at all - buying broadly across the market so that markets continue to work,” Williams said. 

“It's a backstop,” Williams said. “If the conditions get much worse, then people know the Fed is there to help get support functioning the markets in the flow of credit.” 

Market implications

We have a Fed blackout from this weekend on until the Federal Reserve’s next policy-setting meeting will take place July 28 and 29.

Market drivers will continue to stay with economic data and coronavirus sentiment. 

Gold will value safe-haven demand and the US dollar is now in question. 

Gold prices walking a tightrope over $1,800 psychological level