Fed’s Williams Sees Need for Bond Buying Should Economy Slow

May 1 (Bloomberg) -- Federal Reserve Bank of San Francisco President John C. Williams said he would see the need for additional bond buying by the central bank if the pace of economic growth flagged enough to stall labor market gains.

“One threshold for me, in my own thinking, would be if we see economic growth slow to the point where we’re not seeing further progress in bringing the unemployment rate down,” Williams said today on a panel in Beverly Hills, California. Stimulus might also be needed if inflation dropped “significantly” below the Fed’s 2 percent goal, he said.

Those aren’t “the circumstances I currently expect,” said Williams, who votes on the policy-setting Federal Open Market Committee this year. If additional rounds of bond buying are warranted, the Fed may purchase more mortgage-debt, or extend its program to push out the average-maturity of its holdings, dubbed Operation Twist, he said.

To contact the reporters on this story: Caroline Salas Gage in New York at salas1@bloomberg.net; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net