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Fed's Williams says stock market is not out of whack

SANTA CRUZ, Calif. (Reuters) - Rising U.S. equity prices can largely be explained by low interest rates, an improving U.S. economy, and the expectation of tax cuts under President Donald Trump, San Francisco Federal Reserve Bank President John Williams said Tuesday.

"I'm not that worried about the stock market," Williams told the Santa Cruz Chamber of Commerce, adding that it doesn't seem "out of whack" with fundamentals. His biggest worry these days, he says, is the possibility that the economy is kept running too hot for too long, a situation that could set the stage for inflation and aggressive Fed rate hikes in response.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)