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FOMC member close to Yellen sounds hawkish

John Williams,  the president of the San Francisco Fed and considered close to Chair Janet Yellen, had a few hawkish comments. We bring you the highlights here.

Can we expect an excellent NFP? Is a June rate hike getting closer? Here are some highlights.

Regarding inflation, Williams says that rates should rise before inflation hits 2% and that waiting for a 2% inflation could result in overshooting. Regarding current low inflation, Williams sees that as oil  related and transitory. He is even quite confident in the Fed  reaching the 2% target in the next few years.

On jobs, Williams mentions that the US is  obviously getting closer to full employment. He even sees reaching maximum employment by year end or sooner. The pace of job gains has been quite high in the past three months.

Update:  Non-Farm Payrolls + 295K – excellent news  – USD higher

Jobs and inflation: And he is also optimistic on  wages: rising wages are set to boost  inflation to 2% in about 2 years.

Timing: He does not provide a date, but does say that monetary policy lags mean acting before reaching goals. In general, it is safer to raise rates early and gradually than have to hike sharply and causing a destabilization that could result in damaging the recovery.

Next moves: Williams supports removing the patience wording in March (as Yellen already prepared us). And when rate hikes come, they will not necessarily come at each and every meeting.

This is generally very bullish and hawkish. Does he know something about the Non-Farm  Payrolls? We will know soon enough.

In general, he provides more fuel to the US dollar bulls.

More:  EUR/USD: Trading the US Non-Farm Payrolls

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.