Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Fed could lower interest rates in 2024, Williams says

Economy Nov 28, 2022 03:30PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: John C. Williams, president and chief executive officer of the Federal Reserve Bank of New York, Lael Brainard, vice chair of the Board of Governors of the Federal Reserve, and Jerome Powell, chair of the Federal Reserve, walk in Teton Nationa

By Michael S. Derby

NEW YORK (Reuters) -New York Federal Reserve President John Williams on Monday said the U.S. central bank needs to press forward with rate rises but did not say how fast and how far it will need to boost short-term borrowing costs, even as he reckons a rate cut is possible in 2024 as inflation pressures likely ease.

"I do think we're going to need to keep restrictive policy in place for some time; I would expect that to continue through at least next year," Williams said at a virtual event held by the Economic Club of New York, noting that borrowing costs need to rise to bring down overly high levels of inflation. "I do see a point probably in 2024 that we'll start bringing down nominal interest rates because inflation is coming down."

The Fed has boosted the cost of short-term borrowing aggressively this year in its battle to curb inflation. By the Fed's preferred measure, inflation has been running at more than three times the central bank's 2% target this entire year.

While Williams pointed to some signs of progress in bringing down inflation, he said interest rates needed to rise further.

"How high those rates need to be will depend on how the economy and inflation evolve," Williams said.

Williams is vice chair of the rate-setting Federal Open Market Committee, which holds its next policy meeting on Dec. 13-14. The Fed has pushed through oversized 75-basis-point rate increases at its last four policy meetings, bringing the target rate to the current 3.75%-4.00% range.

Fed officials signaled both at the central bank's November meeting and in comments since then that they may find the space to slow the pace of the increases in borrowing costs as they close in on a resting point for their rate-rise campaign. That has opened the door to the prospect the Fed could raise its target rate by 50 basis points at the next gathering.

Williams did not offer any guidance on his preferred size for the rate hike at next month's meeting, or for the ultimate destination of the federal funds rate, which most policymakers in September thought would be between 4.5% and 5.0%.

But he notably did not push back on the idea that the Fed could move at a slower pace next month. The federal funds rate futures market on Monday put a 68% probability on the prospect of a half-percentage-point rise at the Dec. 13-14 meeting.

JOB LOSSES WARNING

With economic growth expected to be in modestly positive territory this year and next, Williams said the U.S. unemployment rate will likely rise to between 4.5% and 5.0% by the end of next year, from the current 3.7%.

Still, he said a recession is not part of his baseline forecast, though risks are to the downside. Williams noted to reporters after his formal remarks that the risks to the economy lie to the downside, and said that based on his outlook, activity is particularly vulnerable to shocks that could send the nation into a recession.

Meanwhile, slower global growth and improving supply chains should help lower inflation. Compared to the 6.2% rise in September in the Fed's preferred inflation gauge, the personal consumption expenditures price index, Williams said inflation should ease to between 5.0% and 5.5% by the close of 2022 and to 3.0% to 3.5% next year.

Williams also said the bond market has been holding up fairly well in the face of the Fed's actions.

Fed could lower interest rates in 2024, Williams says
 

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.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

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 (5)
znao sam
znao sam Nov 28, 2022 4:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
as always, Reuters fake news
Gg BRO
Gg BRO Nov 28, 2022 3:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well I think you had better watch what you are doing with these interest rate hikes. These large hikes as a percentage are unprecedented. You are not giving this economy enough time to react to these massive hikes. You are effectively ********this economy that you have been bailing out for the last 15 years. And for what? I don’t get it! You know full well what you are doing. Why????
Stephen Fa
Stephen Fa Nov 28, 2022 1:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
You could win the lotto too!
Larry Langley
Larry Langley Nov 28, 2022 1:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They're working for hedges and this constant abuse of appearing at will to collaps markets is ultimate corruption
jason xx
jason xx Nov 28, 2022 12:34PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Every fed member is using a different inflation guage
 
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