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Fed's Williams downplays soft US market inflation measures: MNI

[WASHINGTON] A top Federal Reserve official downplayed worries that falling market-based measures of inflation are predictive of overall US price measures, according to a published interview.

San Francisco Fed President John Williams, a centrist at the central bank, told Market News International that spreads between conventional and inflation-protected Treasury securities (TIPS), which have fallen over several months, are usually "not a useful predictor of inflation."

"So really a lot of these movements seem to be really about liquidity premia, risks premia, other factors," Williams, who does not have a vote on policy this year, was quoted as saying on Friday.

Such gauges are "extraordinarily sensitive to energy prices"and other factors, he added in the interview.

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The Fed last week left interest rates unchanged and downgraded its outlook for the US economy due to risks from abroad, despite recently firmer measures of actual inflation data. Even the market-based measures Williams cited rebounded last week.