New York Federal Reserve President John Williams said on Monday the U.S. central bank still has more work to do to lower high levels of inflation, and he also noted he expects to see a notable jump in unemployment as a result of this policy path.
“Inflation is far too high, and persistently high inflation undermines the ability of our economy to perform at its full potential,” Williams said in prepared remarks for a gathering of the Economic Club of New York. “Further tightening of monetary policy should help restore balance between demand and supply and bring inflation back to 2% over the next few years. Tighter monetary policy has begun to cool demand and reduce inflationary pressures,” he said, adding “it will take some time, but I am fully confident we will return to a sustained period of price stability.”
“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. “I do see a point probably in 2024 that we’ll start bringing down nominal interest rates because inflation is coming down.”
Meanwhile, the Fed needs to raise interest rates quite a bit further in order to gain control of inflation and bring back down toward the central bank’s 2% goal, St. Louis Fed President James Bullard said on Monday. “We’ve got a ways to go,” Bullard said in an interview with MarketWatch. “We want to get this inflation under control much sooner than in the 1970s,” Bullard added, noting he prefers to get the policy rate up in short order to create the conditions for price pressures to ebb throughout next year.
