Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Fed's Williams says central bank has more work to do to cool inflation

Economy Oct 03, 2022 03:16PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A woman shops for groceries at El Progreso Market in the Mount Pleasant neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger 2/2

By Michael S. Derby

NEW YORK (Reuters) - Federal Reserve Bank of New York President John Williams said on Monday that while there have been nascent signs of cooling inflation, underlying price pressures remain too high, which means the U.S. central bank must press forward to get inflation under control.

"Clearly, inflation is far too high, and persistently high inflation undermines the ability of our economy to perform at its full potential," Williams said in the text of a speech to be delivered before an audience in Phoenix. "Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done."

Williams, who also serves as vice chairman of the Fed's interest rate-setting Federal Open Market Committee, did not offer a view about what's next for monetary policy. But he said the Fed will continue to press forward with actions aimed at cooling demand, in a bid to help lower inflation back to the Fed’s 2% target. Inflation was at 6.2% in August compared with the same month a year ago.

Williams said lower economic growth and higher unemployment are very likely to be side effects of the Fed’s inflation-fighting mission. Economic activity will likely be close to flat this year, with only modest growth next year, and the unemployment rate, now at 3.7%, will likely rise to 4.5% by the close of 2023, he said.

The Fed has raised its overnight target rate range aggressively this year, rising from near zero levels in March to the current range of between 3% and 3.25%. Officials have penciled in more rate rises over the course of this year and into next year, which could lift the funds rate to around 4.6% by next year, based on forecasts released by the Fed at its policy meeting last month.

There's an active debate over the size of the rate rise at the Fed's next gathering, with many speculating the Fed will again hike by 0.75 percentage point.

Many market participants are questioning the need for rate rises, however, out of fears Fed action will break something in financial markets and send the economy into recession. Others reckon the economy has already seen the worst of the inflation surge and that price pressures are set to ebb of their own accord.

In his remarks, Williams acknowledged that some inflation categories, like commodity prices, are already cooling off. But that’s not enough, he said. Goods demand remains very high and labor market and services demand is outstripping available supply. "This is resulting in broad-based inflation, which will take longer to bring down," he said.

Williams said inflation could ease to 3% next year. "I see inflation moving close to our 2% goal in the next few years," he said, adding that the Fed will do what it takes to lower inflation.

"To help rein in demand to levels consistent with supply—and therefore bring inflation down—monetary policy needs to do its job," Williams said. "The FOMC is taking strong actions toward that end."

Fed's Williams says central bank has more work to do to cool inflation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
jason xx
jason xx Oct 03, 2022 3:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Rate hikes have a lag effect that hasn't even started to show up yet so this guy doesn't know what he's talking about. Thats why the UN is calling them out
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email