BY ANN SAPHIR
SUN VALLEY Idaho Mon Jun 30, 2014 2:36pm EDT
(Reuters) – The Federal Reserve will probably need to keep interest rates near zero for at least another year, a top Fed official said on Monday, even as he expressed optimism the economy is well on its way to health.
“As things get better we can kind of get back to our normal approach to policy,” San Francisco Fed President John Williams told members of the Utah and Montana Bankers Association, predicting full employment and normal inflation by the “early part” of 2016.
The Fed has bought trillions of dollars of long-term securities and kept interest rates near zero since December 2008 in an effort to boost employment and keep the economy from becoming mired in a growth-sapping, downward price spiral.
Now, with economic growth picking up, unemployment falling, and inflation showing signs of rising back to more healthy levels, the Fed is winding down its massive bond-buying program with plans to end it this fall.