Federal Reserve Bank of San Francisco president John Williams said that three or "maybe even more" interest-rate increases this year makes sense, depending on how the Fed is doing on its employment and inflation objectives.

"A view, like the median view of my colleagues, of say three or maybe even more increases this year, makes sense to me, but it would depend on the data," Williams said in a Wall Street Journal video interview broadcast on its website.

The Federal Open Market Committee voted to lift rates for the first time in 2017 on March 15 and signalled that more hikes are coming: the median official expected three rate increases in total this year, based on quarterly estimates submitted by policy makers. That outlook comes at a time when inflation is edging up toward the Fed's 2 per cent objective and unemployment has fallen to levels broadly consistent with an economy at or nearing full employment.

"The momentum in the economy has been very positive," Williams said. "In terms of the US outlook, risks are pretty balanced overall, which is a good place to be."

The Fed has also said that it will start shrinking its balance sheet, which stands at $US4.5 trillion after three rounds of mass-bond buying, once interest-rate normalisation is "well underway". Williams said that standard hasn't yet been met.

"We're not quite there," he said. "But I would expect - assuming the economy progresses as I expect and we raise interest rates a few more times this year, that we'll be closer towards the end of this year to be ready to start that process of the normalisation of the balance sheet."

That said, Williams said the process will be gradual, predictable and that it will take a number of years to get the balance sheet back to "normal". He gave no indication of what "normal" means: how large the Fed's balance sheet will ultimately be is an open question in markets and has not been publicly settled by the policy-setting committee.

Williams does not vote on monetary policy this year, but is seen by economists as a relatively good signal of future policy. He was the director of research at the San Francisco Fed when now-Fed chair Janet Yellen was president of the bank.