3:19 PM » Fed's Williams: QE likely to end this year
WASHINGTON (MarketWatch) - The Federal Reserve will likely continue to taper and eventually eliminate its bond purchases this year assuming the economy picks up as expected, said John Williams, president of the San Francisco Fed, on Tuesday. Ending the asset purchases "will be an important first step towards eventually bringing monetary policy back to a more normal setting," Williams said in a speech to a bankers' convention in Phoenix, Ariz. Williams quickly cautioned that these policy steps depend on prevailing economic conditions rather than on some fixed date on the calendar. And he stressed the Fed was not near hiking rates. "We starting to ease off the gas but we're nowhere near hitting the brakes yet," he said. Williams was fairly optimistic about the outlook, describing "newfound momentum" in the economy and forecasting a 3% growth rate in 2014 and 2015. Inflation seems to have "finally bottomed out" and should begin to slowly creep higher towards the Fed's 2% target, he added. "We're still not where the economy should be, but we're well on the road to recovery, and I see things getting better in the year ahead," Williams said.