"In the big picture, I don't see any of the data we've seen recently as being that different from our underlying view that we're seeing continued good, positive momentum in the economy and continued job growth"
- John C. Williams, president of the Federal Reserve Bank of San Francisco
Last week the first testimony by Janet Yellen as the Chairman of the Fed confirmed that interventionist Keynesian policies at the U.S. Federal Reserve are considered to be well-entrenched and still far from being over. Yellen signalled that accommodative policy will remain in place amid economic recovery. But is the world's largest economy that strong to continue expanding at a stable pace without government support? The Fed will still be purchasing tens of billions more dollars of assets each month despite the fact its balance sheet is already equal to almost 25% of the nation's GDP.
On the one hand, the Fed is facing a risk of creating an asset bubble, on the other hand, they still have to boost economic growth. Taking into account the latest weak fundamental data, some of the economists started to express their concerns that the Fed should continue tapering its stimulus. Nevertheless, John C. Williams, the president of the Fed of San Francisco backed further tapering, saying there is no reason to stop it. Though Williams is not one of the voting members of the FOMC, he participates in the meetings and has a strong influence on policy options. Regarding disappointing job growth during the last several months, he stressed out that even weak job growth are sufficient enough to have continued improvement in the key labour market.
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