Federal Reserve Bank of New York President John Williams said interest rates will have to stay at restrictive levels “for some time” to bring inflation back down to the US central bank’s 2% target.
(Bloomberg) — Federal Reserve Bank of New York President John Williams said interest rates will have to stay at restrictive levels “for some time” to bring inflation back down to the US central bank’s 2% target.
“We’re going to stick at it to make sure that we really achieve that goal of 2% on a sustained basis,” Williams said Wednesday during a moderated conversation at Queens College in New York. “We need to keep this restrictive stance of policy in place for some time.”
Fed officials are expected to leave interest rates steady when they meet at the end of this month, giving themselves more time to evaluate the economy after raising rates aggressively from near zero in March 2022 to above 5% in July.
Consumer spending and the labor market have so far remained resilient to higher borrowing costs, with retail sales exceeding all forecasts and employment surging unexpectedly last month. That strength makes it unlikely that officials will completely rule out further rate increases when they gather on Oct. 31-Nov. 1.
Read More: Waller Says Fed Can ‘Watch and See’ If More Rate Hikes Needed
Williams pointed to projections published in September which showed Fed officials see rate cuts commencing at some point next year, saying the benchmark “will continue to come down over the next couple of years, but that’s going to depend on the data, depend on what we’re seeing.”
He also commented on the Israel-Hamas war, calling it “a human tragedy.”
“We have to be watching what’s happening around the world, whether it’s war or other geopolitical developments, and taking those into account about how we see the global economy, how we see this feeding into the US economy,” Williams said. “We live in a global financial system and a global economy.”
Last month, the New York Fed chief suggested the central bank may be done hiking its benchmark federal funds rate, with it now “at, or near, the peak level.”
(Updates with more Williams comments beginning in fifth paragraph.)
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