SAN FRANCISCO(Reuters) - San Francisco Federal Reserve President John Williams on Monday repeated his view that raising U.S. interest rates is not a suitable tool for stabilizing financial markets in a crisis.
“I am unconvinced that monetary policy should be used as an explicit tool” for stabilizing financial markets, Williams said at the American Economic Association. “The tradeoffs are not favorable at all” in terms of reaching the Fed’s goals of stable inflation and full employment, and indeed, targeting financial stability with rate policy could end up undermining the Fed’s credibility on its inflation goal.
The remarks were largely a repetition of comments Williams gave in mid-2015.
The Fed last month raised interest rates for the first time since the financial crisis.
Reporting by Ann Saphir; editing by Diane Craft