San Francisco Fed President John Williams said that he is confident that the economy would continue to grow at a healthy pace even if the Fed increases interest rates. He thinks that the Fed is very close to reaching its dual mandate goals and the central bank needs to gradually ease its accommodative monetary policy to avoid making the economy too hot, which is finally unsustainable. He stressed that the unemployment level has reached the lowest sustainable level of 4.7 percent and the inflation is moving in the right direction. With regard to the possibility of a March rate hike, Mr. Williams said that he expects that the possibility of a rate increase in March to get serious consideration when the policymakers meet in a two-day meeting to be held on 14/15 March.

Previously two other Fed governors, Dallas Fed President Robert Kaplan and Philadelphia Fed President Patrick Harker have showered similar comments. As more and more Fed speakers catch the hawkish lines of commentaries, the market is now pricing more than a 50 percent probability of a hike in March.

However, Mr. Williams comments do not change our FOMC dashboard as he is not a voting member this year.