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Federal Reserve's Williams sees Fed 'half way' on rate-hike path

San Francisco Federal Reserve President John Williams speaks to Reuters in San Francisco, California, U.S. on September 27, 2016.

[NEW YORK] The US central bank is roughly at the mid-point on its current path to normalise interest rates as the economy has shown further improvement even without fiscal stimulus, San Francisco Federal Reserve President John Williams told CNN television. "We're about half way there," Mr Williams said in an interview with the news network recorded on Tuesday and aired on Wednesday, when asked how far along the Fed was on its rate-hike path.

The Fed has raised key overnight borrowing costs four times since December 2015, while unemployment touched a 16-year low in July at 4.3 per cent and Wall Street recently posted all-time highs on upbeat company earnings.

However, domestic wage growth has remained sluggish and overall inflation has been stuck below the Fed's 2-per cent goal, which Fed officials have cited as critical to supporting long-term economic growth.

Earlier on Wednesday prior to the airing of Mr Williams' interview, the Fed released minutes of its July 25-26 policy meeting where policy-makers appeared more wary about the downturn in inflation since the start of the year.

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Mr Williams, who is not a voting member on the Fed's policy-setting group in 2017, has supported further rate increases at a gradual pace.

Interest rates futures implied traders saw less than a 50 per cent chance the Fed would raise rates by year-end .

Mr Williams said federal tax reform and investment in roads, bridges and major building projects can play vital roles to support long-term economic growth.

Investors have hoped US President Donald Trump and lawmakers can reach a deal to enact up to US$1 trillion worth of infrastructure spending to promote jobs and capital spending. "It might not be enough," Mr Williams said, noting the size of the US economy at about US$20 trillion. "It's definitely in the right direction."