Williams: Must watch how economy responds as it presses toward neutral rate

WASHINGTON – The Federal Reserve will need to keep a careful eye on how the economy reacts as it raises interest rates, and scale the pace of its rate increases accordingly, New York Fed President John Williams said on Saturday.

Williams, citing events in 2019 when the economy slowed as the Fed approached a neutral rate, said “the experience from that is that we have to move to a more normal level but make sure we are assessing and evaluating…There is no question that is the direction we are moving. Exactly how quickly we do that depends on the circumstances.”

(Reporting by Howard Schneider; Editing by Diane Craft)