Federal Reserve Bank of San Francisco President John Williams said a discussion should happen mid-year about tightening policy, even as he lowered his growth forecast. Williams, who votes on policy this year, said in remarks prepared for delivery in Sydney Tuesday that he expects U.S. real gross domestic product to grow about 2.5 percent in 2015 from a previous forecast of just under 3 percent. He said he expected an improving economy to push wages and prices up, and inflation to move back toward the Fed’s 2 percent target. “I think that by mid-year it will be the time to have a discussion about starting to raise rates,” Williams said, altering the phrase from “serious discussion” that he used in a March 5 address in Honolulu. “I’m not making a prediction about what the Fed will do; I am saying that in my view, it would be appropriate to start weighing the pros and cons of taking action at that time.” In London, Federal Reserve Bank of St. Louis President James Bullard said the U.S. labor market will continue to tighten, increasing pressure on inflation. “Will we see wage pressure going forward? Yes, I think you will because labor markets are tightening up,” said Bullard, a non-voting member of the Federal Open Market Committee this year. “‘With the U.S. economy potentially going into boom phase here with very low unemployment, there is some risk you’d be surprised to the upside on inflation.”
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