(Adds comments, background on Williams, Yellen)
CHICAGO, July 28 A recent spate of weak U.S.
economic data signals a slower recovery than earlier expected,
but does not portend a double-dip recession, San Francisco
Federal Reserve Bank's top economist said on Wednesday.
With short-term interest rates near zero since December
2008, the Fed's monetary policy remains "highly supportive" of
the recovery, the regional bank's top researcher said in the
text of speech to a group of community leaders in Portland,
"Although discouraging, the recent softness in the economic
data looks much more like a bump in the road of what we already
thought would be a gradual recovery, rather than a swerve into
the ditch," John Williams wrote.
"The economy is still on a recovery path, with moderate
growth, and ... inflation will remain very low," he wrote.
Williams delivered the economic policy speech in lieu of
San Francisco Fed President Janet Yellen, who had agreed to the
appearance before her nomination as vice-chairman of the
Washington-based Federal Reserve Board.
The U.S. Senate Banking Committee earlier on Wednesday
approved the nomination of three new members to the Fed Board,
including Yellen, clearing the way for a vote by the full
Williams is considered to be a candidate to succeed Yellen,
although the San Francisco Fed has declined to say much on the
search except to confirm that it has begun.
Despite recent drops in both housing and retail sales, as
well as consumer confidence, the recovery remains "several
notches" above a double-dip recession, he said. It will likely
take a considerable period before consumers and businesses
regain confidence and trust and resume spending and hiring.
Unemployment will likely fall only to 8.5 percent by the
end of next year, and it will take years before reaching more
normal levels, he said.
William said public expectations the Fed will "do what it
takes" are keeping both inflation and deflation in check.
He said he expects inflation to stay near 1 percent before
reaching about 2 percent upon full recovery, and does not
"But we face significant risks to this outlook and need to
remain vigilant," he said.