Fed's Williams ties rising bond yields to strong economy, CNBC reports

Investors widely expect the Federal Reserve to raise what is now a 3.5% to 3.75% federal funds target rate range at its September 15 to 16 Federal Open Market Committee meeting. Many central bankers have signaled alarm at the persistence of inflation over the 2% target and have either called for or signaled openness to raising rates to counter price pressures.

In a speech on Friday, Fed Chairman Kevin Warsh indicated a willingness to act if the price pressure environment called for it.

In the CNBC interview, Williams framed the upcoming rate decision as a complicated one.

“There’s no clear science” that says monetary policy is currently in the right position to accomplish the Fed’s objectives and lower inflation to target in the next year or so, Williams said.

When it comes to getting price pressures down, “I would say that the data recently have been encouraging towards that, but again we can't just look at a month or two” and be confident inflation is headed in the right direction.