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In a clear effort to ease market fears, John Williams says market rate hikes will be gradual and the Fed Needs to "Stick to That Plan".

The U.S. central bank should stick to the plan of gradual rate hikes even though the economy has shown such “buoyancy” recently,” said San Francisco Fed President John Williams on Friday.

In a speech to the Financial Women of San Francisco, Williams insisted the Fed should not “have a knee-jerk reaction to all this positivity” about the economy.

Raising rates too rapidly could knock the expansion off track “and that’s the last thing I want to see happen,” Williams said.

In his speech, Williams noted that inflation appears to “finally” be turning higher toward the Fed’s 2% target, but added he did not think the economy was overheating.

For the moment, I don’t see signs of an economy going into overdrive or a bubble about to burst, so I have not adjusted my views of appropriate monetary policy,” he said.

Thanks John, for the laugh of the day. Central bankers never see bubbles. Why? They created them.

Williams' statements are in contrast to those made by Alan Greenspan just a few days ago. For details, please see the Man Who Said "Bubbles Only Identified When They Burst" Suddenly Detects Bubbles.

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Mike "Mish" Shedlock