Tags: Federal Reserve | Williams | emerging markets | US outlook

Fed's Williams: Emerging-Market Turmoil Won't Change US Outlook

Friday, 31 January 2014 02:20 PM

Federal Reserve Bank of San Francisco President John Williams said the turmoil in emerging markets hasn’t altered his forecast that the U.S. economy will improve this year.

“We shouldn’t focus too much on the short-term developments in markets,” Williams, who doesn’t vote on policy this year, said in an interview on Fox Business Network. “Monetary policy really does need to have a medium-term focus” on the outlook for employment and inflation, he said.

Stocks fell today, pushing the Standard & Poor’s 500 Index to a third weekly loss, and Treasurys rose amid a slump in emerging-market currencies and weaker corporate earnings.

On Jan. 29 the Fed cut its bond-purchase program to a monthly pace of $65 billion from $75 billion and didn’t mention emerging markets in its statement.

About $1.8 trillion has been erased from the value of equities worldwide this month. The MSCI Emerging Markets Index fell 0.2 percent, leaving the gauge down 6.8 percent in January.

Williams said the Fed is monitoring markets “very closely” and that the strategy of reducing bond purchases in measured steps should “remove some of the uncertainty around global financial markets.”

The U.S. economy added 74,000 jobs in December, the worst month since January 2011, according to the Labor Department’s Jan. 10 report.

Fed officials were right to continue reducing bond purchases following the report, Williams said, as “there’s a lot of indicators of payroll employment in the job market and most of those continue to show solid improvement.”

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Federal Reserve Bank of San Francisco President John Williams said the turmoil in emerging markets hasn't altered his forecast that the U.S. economy will improve this year.
Federal Reserve,Williams,emerging markets,US outlook
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2014-20-31
Friday, 31 January 2014 02:20 PM
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