New York Fed President John Williams said in a speech that FOMC communicated “two important message” about the likely future course of monetary policy during March meeting, along with the rate hike.
Firstly, it expects that “ongoing increases in the target range will be appropriate” and “the median assessment of the appropriate level of the federal funds rate at the end of next year is expected to be somewhat above the median assessment of its longer-run level”.
Secondly, FOMC expects to “decide at a coming meeting when to begin reducing its holdings of securities”. He added, “I expect that this process of reducing the size of the balance sheet can begin as soon as the May FOMC meeting”.
“These actions should enable us to manage the proverbial soft landing in a way that maintains a sustained strong economy and labor market,” Williams said. “Both are well positioned to withstand tighter monetary policy. In fact, I expect the economy to continue to grow this year and for the unemployment rate to remain close to its current level.”