![]() The finance industry has coined a term, the “Goldilocks Economy” (often attributed to economist David Shulman), to describe an economy that is not too hot or too cold but “just right”. As you likely recall, Goldilocks discovers a house in the woods in which she finds and tries three bowls of porridge, three chairs and three beds successively, with the first two being “not right” for opposite reasons and each time finding the third “just right”. The tensions over trade policy pose a risk as do the projected sharp increases in government budget deficits after the enactment of $1.5 trillion in tax cuts and a recent boost in government spending, he said.The story of Goldilocks and the Three Bears is one of the most popular fairy tales in the English language. ![]() history, would likely continue over the next two years, although there are threats to that forecast. “I am personally comfortable with the fact that inflation may overshoot that 2 percent (Fed target) for a while,” Williams said.ĭudley, in a separate interview with Bloomberg News, said Friday that he believes the current economic expansion, now the second longest in U.S. While many economists believe that the country is now at full employment, Williams said he could see the jobless rate dropping further to around 3.5 percent, with the central bank “modestly overshooting” its 2 percent target for inflation for a time given that the Fed had failed for a number of years after the Great Recession to achieve the 2 percent inflation goal. At its March meeting, the Fed projected raising rates three times this year, the same number of hikes it delivered in 2017. The Fed did hike the rate in March and many economists expect the central bank to move again at the June meeting. For years the Fed has failed to achieve its target of inflation rising at an annual rate of 2 percent so the recent gains toward that goal were encouraging, he said, noting that both wages and inflation were rising at moderate levels.Īt its meeting on Wednesday, the Fed left its key policy rate unchanged at a still-low level of 1.5 to 1.75 percent. Williams, one of several Fed officials who spoke Friday at a policy conference at Stanford University, said that he was not concerned that unemployment has now fallen below 4 percent with inflation rising. economist and professor at Columbia University, who was recently nominated by President Donald Trump to serve as vice chairman of the Fed’s seven-member board in Washington. Also in that group is Richard Clarida, another Ph.D. ![]() economist and the former research director of the San Francisco Fed, Williams is being viewed as part of the brain trust that Federal Reserve Chairman Jerome Powell, a non-economist, will rely on in setting monetary policy. He will succeed William Dudley, who is retiring from the central bank in June.Ī Ph.D. ![]() As president of the New York Fed, he will have a permanent vote and will serve as the FOMC’s vice chairman. Williams is a voter on the Federal Open Market Committee, the panel of Fed board members and regional bank presidents who set interest rates. Williams will be moving next month to take over as president of the Fed’s most influential regional bank in New York. “I feel this is pretty much a Goldilocks economy,” Williams said, noting the strong labor market and moderate gains in wages and inflation. ![]()
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