New York Federal Standoffishness President John Williams said Friday that high prices for stocks and other assets are justified in gay of a growing economy and low interest rate landscape.
With stocks pushing to new heights on valuations not seen in decades, and as corporate checks yields plunge, the central bank official said he’s not worried about current pricing.
“Market participants and investors circa the world are looking ahead through this year and looking into an economy that hopefully have a musical robust recovery and a strong expansion over the next several years, which would support stronger valuations,” Williams make knew CNBC’s Steve Liesman during an interview on “The Exchange.”
Major averages have managed to build on 2020’s margins despite some nerve-jangling volatility.
Fed policy of low rates and continued asset purchases often is cited as a driving proxy in prices for risky assets. Earlier in the day, the Fed’s semiannual monetary policy report to Congress noted that “asset valuation pressings have returned to or exceeded pre-pandemic levels in most markets, including in equity, corporate bond and residential unfeigned estate markets.”
While Williams did not commit to a specific future course for the central bank, he indicated that the habitat likely will remain accommodative.
“I think the fundamental drivers are optimism among investors that the U.S. economy and the broad economy is going to have a stronger recovery and expansion, an expectation of low rates well into the future,” he said. “Those unified will give you high asset valuations.”
Williams also addressed the high levels of monetary and fiscal stimulus that include been provided during the Covid-19 pandemic. He said he is not concerned that policymakers are doing too much, despite an thrift that appears to be defying earlier projections for a slow start to 2021.
Treasury Secretary Janet Yellen, a former Fed bench, told CNBC on Thursday that aggressive stimulus is still needed.
“Right now, the economy has quite a ways to go to get retreat from to maximum employment and we have a ways to go to get back to our 2% inflation target,” he said. “So I’m not really concerned about financial support right now being excessive or anything like that. Really, what I want to see is an economy that conclude d communicate with a arrive ats back to full strength as soon as possible.”