San Francisco Fed President John Williams told The Wall Street Journal that the economy has "very good momentum" heading into 2018 and suggested that additional rate hikes next year would be reasonable.
Williams, who will be a voting member of the Federal Open Market Committee next year, said it "seems like a reasonable view" to expect perhaps three rate hikes in 2018 and then two or three in 2019, given a strengthening economy and his view that inflation will increase at a faster pace.
Last week, two FOMC members dissented on the Fed's decision to raise the federal funds rate: Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari. The two have since released statements expressing concerns that inflation is too low, with Kashkari also highlighting the yield curve continuing to flatten, potentially signaling an upcoming recession.
But Williams said in the interview that inflation should pick back up and reach the Fed's 2% goal. As for the yield curve, Williams said it is not something that people should ignore but said the Fed's efforts to reduce its roughly $4.5 trillion balance sheet should ease those concerns.