By Patrick McGroarty
PRETORIA---Reserve Bank of San Francisco President John Williams
said Friday that central banks should start turning away from the
extraordinary measures taken to spur growth in recent years and
return to the narrower focus of controlling inflation.
"It really is just about providing a strong nominal anchor and
strong macroeconomic performance and lowering expectations about
what's feasible and what's appropriate for monetary policy to do,"
Mr. Williams told attendees of a conference held by the South
African Reserve Bank.
In the wake of this week's Federal Open Market Committee
meeting, he also said efforts like the extraordinary bond-buying
program the Fed said it would soon end shouldn't be repeated
soon.
"I view the quantitative easing asset purchase programs to be
purely an effect of the economic situation we've been in and not as
a normal part of monetary policy in the future," Mr. Williams
said.
And while he said the global financial crisis has obliged
central banks to be more transparent about their operations, he
indicated that the Fed might not always be so explicit about its
long-term policy plans. Mr. Williams has said previously that he
believes the Fed should raise rates sometime in mid-2015.
"Once we're back to normal policy, we don't need to have
explicitly forward guidance," Mr. Williams said. "We have to act in
a consistent, systematic way--not alone with our words, but with
our actions."
In his prepared remarks, Mr. Williams said central banks'
largely successful pursuit of low inflation could mean they more
frequently run into periods where monetary policy hits levels of
interest rates that can be cut no further. Mr. Williams said
flirting with this level of monetary policy could come hand-in-hand
with success in keeping inflation low.
Michael S. Derby contributed to this article.
Write to Patrick McGroarty at
patrick.mcgroarty@wsj.com<mailto:patrick.mcgroarty@wsj.com>.