Fed's Williams says worried about impact of government shutdown

SAN DIEGO Thu Oct 3, 2013 1:48pm EDT

John Williams, president and chief executive of the Federal Reserve Bank of San Francisco, speaks in a panel discussion titled ''U.S. Overview: Is the Recovery Sustainable'' at the Milken Institute Global Conference in Beverly Hills, California May 1, 2012. REUTERS/Danny Moloshok

John Williams, president and chief executive of the Federal Reserve Bank of San Francisco, speaks in a panel discussion titled ''U.S. Overview: Is the Recovery Sustainable'' at the Milken Institute Global Conference in Beverly Hills, California May 1, 2012.

Credit: Reuters/Danny Moloshok

SAN DIEGO (Reuters) - The president of the San Francisco Federal Reserve Bank said on Thursday he was nervous and worried about the impact to the financial markets of a prolonged shutdown of the federal government, particularly if no action is taken to raise the nation's debt ceiling.

In remarks following an address made at the University of California, San Diego, John Williams said the shutdown, if relatively brief, should not have a significant impact on the economy.

A far greater worry, he said, would be any undermining of confidence in the U.S. economy and the U.S. dollar.

"I think it is important that we deal with the debt ceiling issue before we run out of money," Williams said. He said Treasury officials have pegged that date as Oct 17.

He also said the Federal Reserve is on track to begin by later this year to taper off its current $85-billion-a-month bond-purchase program.

Williams said his stance on the issue lines up with that of Federal Reserve Chairman Ben Bernanke, who has said the Fed would begin cutting back on bond purchases this year, stopping entirely by the middle of next year.

Williams said economic data since June has been "mixed," which explains why the Fed did not act in September. "Data have come out a little softer than I had expected," he said, noting concern over the summer's significant increase in interest rates and potential negative impact on the housing market.

He said the beginning of the tapering will depend entirely on how the economy performs.

Williams noted that the current government shutdown does limit the amount of data available to gauge the economy, but said the Fed has access to its own statistics as well as a range of reports from industry groups and sources outside of the government.

(Reporting By Deena Beasley; Editing by Chizu Nomiyama)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.