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4/6/2017, 1:31 PM (Source: TeleTrader)
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Fed's Williams: Data may allow four hikes this year

The recent broad shift of focus expressed by officials of the United States Federal Reserve about the future of its $4.5 trillion balance sheet and asset purchases was mirrored on Thursday by John Williams, who said normalization would be appropriate before the end of the year.

Three increases by one quarter of a percentage point in the central bank's benchmark interest rate for 2017 are the "base case," while a fourth hike is possible if macroeconomic indicators allow such a move, the head of the San Francisco Fed said at the German Banking Congress in Berlin. Tightening is also needed to counter potential imbalances, he stressed.

Also in line with many of his peers at the national monetary policy panel, the currently nonvoting member of the Federal Open Market Committee expressed the view inflation still needs to reach a sustainable target level of 2%. However, the trend is favorable and the economy is "doing very well," with more potential evident, he added.

The unwinding of the balance sheet may last for many years, according to Williams. The central banker brushed off the notion a dangerous bubble is forming in the commercial real estate, but stated the sector does cause more concern than equities.

Breaking the News / IT