New York Fed President John Williams said on Monday that although there were signs of easing inflation, price pressures were likely to remain high due to a tight labor market and other factors, justifying higher interest rates for the foreseeable future. He expressed the view that it would become
“There are clear signs that demand is outstripping supply in the broader economy and the labor market,” Williams said in an interview with Bloomberg Television. He expected inflation to slow to 3-3.5% next year, but said the “real question” was how to get to 2%.
“We have to do what is necessary,” he said. If necessary, the policy rate might be higher than the level indicated by members of the Federal Open Market Committee (FOMC) in their latest economic forecasts, he said.
The median forecast of FOMC participants showed that the policy rate would fall to 5.1% by the end of 2023 and 4.1% in 2024, both of which were higher than their forecasts in September.
Latest Fed Dot Plot, Fed Funds Rate Ends 2023 at 5.1% – Chart
news-rsf-original-reference paywall">Original title:Fed’s Williams Says Tight Labor Market Warrants Higher Rates(excerpt)
