Fed should hike rates in second half of 2015: Williams

"Given the economic outlook, and given also my view that we need accommodative policy relative to historical norms, we need to have relatively low levels of interest rates for quite some time," San Francisco Federal Reserve Bank President John Williams told Reuters. But the pace of rate increases, in Williams' view, should be extremely slow, with rates ending 2016 well below the historical norm of 4 percent, "with the first digit being a '2,'" he said. That suggests a pace of rate hikes well short of that pursued the last time the Fed raised rates, when Alan Greenspan oversaw a quarter-of-a-percentage-point rate increase at 17 consecutive policy-setting meetings, starting in June 2004. With the U.S. economy gaining strength and the unemployment rate down sharply from its recession-era high, the Fed began earlier this year to cut its bond-buying stimulus.

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