Will the Fed hike rates this year?

The recent disappointing US labour market report did not cause John Williams, President of the San Francisco Fed to change his mind. He considers a rate hike before the end of the year to be appropriate. Williams who as a moderate dove on the FOMC is amongst those who could be decisive in the vote made some interesting points. 

He considers 100,000 new jobs per month to be sufficient to meet the current rise in labour available (so therefore the latest report obviously does not constitute a problem for him). Against the background of the strong USD he does not consider the fact that inflation is below target to be problematical either. 

Moreover he referred to signs of rising inflation domestically. In any case Williams did not sound like someone who was going to vote against a rate hike in December. At the same time he pointed out that the rate hike cycle was likely to be the most cautious in the Fed's history. 

"And the projected cautious approach is an argument not to wait too long with the lift off in his view as the Fed may otherwise be forced to proceed more quickly. It is not really surprising that USD was unable to benefit from Williams' comments as the outlook of a slow and cautious rate hike path is not exactly the stuff that USD bulls' dreams are made of", opines Commerzbank.