New York Fed President John Williams maintained a hawkish stance on Fed’s monetary policy, asserting the necessity of persisting with rate hikes to control surging inflation.
“We haven’t said we are done raising rates,” Williams stated yesterday, emphasizing that future decisions would be data-driven, aligning with Fed’s goals. He stressed, “We’ve made incredible progress” on tackling inflation, but left the door open for further policy tightening, saying, “if additional policy firming is appropriate, we’ll do that.”
Williams projected that a restrictive monetary policy stance would be necessary for an extended period to curb inflation from 4% to the targeted 2%. He denied any likelihood of rate cuts in the current year, quashing speculations of such a move. He said, “I do not see in my baseline forecast any reason to cut interest rates this year.”
Addressing the inflation conundrum, Williams declared price pressures “too high” and acknowledged a discrepancy between demand and supply, with the former outpacing the latter. He noted signs of a “gradual cooling in the demand for labor,” as well as for certain goods and commodities, yet emphasized that these were outweighed by the overall demand-supply mismatch.