San Fran Fed wants fiscal boost

Tax and spending policies must be changed to boost the US economy, John Williams, president of the San Francisco Fed, said yesterday. Moves to control the budget deficit “are essential in the long run” but are “damping the economy, not boosting it” currently, he said. Williams praised the steps the Fed has taken to loosen policy to stimulate demand, but wants to see higher state spending to “complement” the monetary loosening. Williams also pointed to the Eurozone crisis as the main risk to the economy through 2012 – gridlock in the EU and Washington “add to a sense of foreboding” – and said he expects unemployment to stay above eight per cent into 2013 and fall to around seven per cent by the end of 2014. He was appointed last spring and becomes a voting member of the rate-setting Federal Open Markets Committee this year.