A top Federal Reserve official seen as closely allied with Fed Chair Janet Yellen is sticking to his view that the U.S. central bank probably won't be raising interest rates until the second half of 2015, according to an interview published on Monday.
San Francisco Federal Reserve Bank President John Williams also played down Yellen's comment last week that suggested rates could rise somewhere around six months after the Fed ends its massive bond buying stimulus program, a timetable that would put a first rate hike some time next spring.
Markets were caught off guard by the remark, with stocks selling off as traders priced in a slightly earlier rate hike than previously expected.
"I really don't see anything of what we said as suggesting that we're going to tighten monetary policy sooner rather than previously," Williams told the Washington Post in an interview that took place on Friday.
But he also acknowledged that the rapid decline in unemployment is consistent with a slightly faster timetable for lifting short-term rates, which the Fed has held near zero since late 2008.
"As we get toward the end of 2016, sure, we're maybe normalizing monetary policy out there a little bit more than people thought in December," Williams said. "In the big picture, whether it's at one meeting or the next meeting doesn't matter nearly as much as getting the general path of policy in the right place."
(Reporting by Ann Saphir; Editing by Chris Reese)