Pub. 4 2014 Issue 2

8 www.azbankers.org T H E AzBA AND THE LAI PHOENIX CHAPTER WAS VERY FORTUNATE TO HAVE DR. JOHN WILLIAMS, PRESIDENT OF THE SAN FRAN- cisco Federal Reserve Bank as a guest speaker in January. Over 150 people attended the meeting. Dr. Williams addressed the topic of “Housing, Banking and the Recovery: The Outlook.” He provided the audi- ence an overview of his perspective of the economy, housing market and banking conditions. Economic condi- tions are improving and the housing market has been rebounding nationally since early 2012. Dr. Williams stated that this was a result of accommodative monetary policy by the Fed, housing prices have been in steep decline and as the labor market improves, household incomes are rising. Housing prices have begun to rise and this has helped to re- duce foreclosures. He does not believe that the recovery in the housing market has caused prices to rise too rapidly and is not sounding alarm bells at this time. Housing prices have risen about 12.5% in the Phoenix area over the last year, and foreclosures are now below the national rates. Stricter lending policies, fewer new homes being constructed and increased mortgage rates are keeping the rebound in check. Dr. Williams explained to the audi- ence the dual role of the Federal Reserve – fighting inflation and maximum employment. Part of the response by the Federal Reserve to the financial crisis and slow recovery has been the purchas- ing of bonds. The initial response by the Federal Reserve to reduce short-term interest rates to near zero was not suf- ficient to stimulate the economy. The purchase of large-scale asset purchases (quantitative easing) increased the price of the assets while rates on longer-term loans of automobiles and home mort- gages decreased. Excessively low inflation is also a problem facing the economy. The Federal Reserve defines price stabil- ity as an inflation rate of two percent, but inflation has been running below two percent since April of 2012. The current rate of unemployment at seven percent is above the traditional sustain- able level of unemployment which is below five and six percent. The combination of these two factors calls for the continuation of monetary accommodation. As Dr. Williams succinctly ended his speech, “In other words, we’re starting to ease off the gas, but we’re nowhere near hitting the brakes yet.” Below will provide you with the en- tire text of his speech as well as related press article links. Press coverage of the event included: The Wall Street Journal, Bloomberg, Reuters, Market News In- ternational and the Arizona Republic. w To read the full speech, follow this link: http://www.frbsf.org/our- district/press/presidents-speeches/ williams-speeches/2014/january/ housing-banking-economic-recovery- outlook/ The following links are press related articles to the remarks made by Dr. Wil- liams: http://blogs.wsj.com/economics/2014/0 1/07/feds-williams-fed-likely-to-taper- more-end-bond-buying-this-year/?KEY WORDS=John+Williams&mod=wsj_ valettop_email http://www.bloomberg.com/news/2014- 01-07/fed-s-williams-says-reverse-repos- may-be-very-useful-rate-tool.html http://www.cnbc.com/id/101317514 http://www.businessweek.com/ news/2014-01-07/fed-s-williams-says- reverse-repos-may-be-very-useful-rate- tool http://www.nasdaq.com/article/feds- williams-fed-likely-to-taper-more-end- bondbuying-this-year-20140107-00958 President of the San Francisco Federal Reserve Bank, Dr. John Williams, Visits Phoenix to Address Banking and Real Estate Community Dr. John Williams, President of the San Francisco Federal Reserve Bank