GOTEBORG, Sweden — Federal Reserve Bank of San Francisco President John Williams said Tuesday that the inevitable return of the U.S. economy to the point where monetary stimulus must be withdrawn is a particular challenge under the current circumstances.

Speaking at the European Economic Association-Econometric Society Congress in the southern Swedish city of Gothenburg, Williams said that "getting monetary policy back to normal after any cycle is difficult. This time it's going to be particularly difficult for us because we've got a number of moving parts."

"Of course we've added an enormous amount of monetary stimulus that we'll have to withdraw," he said.

Communication is a very important part of the process, Williams said, adding he was "very confident that we can continue to explain our policy framework."

Williams said he was also "very confident" that the Federal Reserve has the "tools" it needs to readjust its policy stance, which remains "very accommodative" at the moment.

"The first step is to end the purchase program and stop adding to our balance sheet," he said.

In approaching the normalization process, however, "we must focus on our goals of getting employment back to normal" as well as maintaining inflation near 2%, he stressed.

The Fed needs to communicate not just with the markets and public but also with other central banks, he said, suggesting that this might help reduce the unwanted externalities of policy moves.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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