HALF MOON BAY -- Worries about whether and how U.S. lawmakers will take the hard steps needed to put the nation on a sustainable fiscal path are top of mind as U.S. central bankers weigh monetary policy, a top Federal Reserve official said on Monday.
"We make up our little short list, what are the biggest things that keep us up at night," John Williams, president of the San Francisco Federal Reserve Bank, said at a technology-focused conference here. "Generally, Europe and Asia have been two, three, four, somewhere along those lines; right now, it's the fiscal cliff."
Williams said he is frustrated that lawmakers reached an agreement only on the "easiest" of challenges as they headed off a sweep of tax rises that otherwise would have come into effect this year. Hard and unpopular choices on government spending are still ahead, he said.
Williams also said that while he believes the Fed's easy monetary policies have been effective in boosting growth, they have not been as effective as otherwise, in large part because credit is too tight for some borrowers and because of various unexpected shocks that have hit the economy.