Williams: Our job is to make sure that we restore price stability which is truly the foundation of a strong economy. — Reuters
NEW YORK: Federal Reserve (Fed) Bank of New York president John Williams says it’s critical the US central bank remains committed to its 2% inflation goal, and emphasises monetary policy must bring supply and demand into better balance to lower inflation.
“At the end of the day our job is clear,” Williams said at a conference held at the New York Fed.
“Our job is to make sure that we restore price stability which is truly the foundation of a strong economy.”
Fed officials have been indicating that interest rates may need to move higher than previously thought following upside inflation and labor market surprises this month.
Williams said strong demand in the US economy continues to exceed supply, pointing to persistent price pressures in the services sector, excluding food, energy and shelter.
He also said continued demand for goods, as well as ongoing supply-chain issues in the global economy, may keep prices from falling as quickly as some have expected.
St Louis Fed president James Bullard, speaking earlier Wednesday at a separate event, said the US economy is proving more resilient than expected and warrants additional rate hikes, potentially to as high as 5.38%.
Policymakers increased rates by a quarter percentage point at their Jan 31 to Feb 1 meeting, to a range of 4.5% to 4.75%.
It was a slowdown from a 50 basis-point hike in December, which followed four consecutive 75 basis-point increases last year.
Officials have been raising rates at the fastest clip since the early 1980s in an effort to stem stubbornly high inflation.
Bullard and his colleague Loretta Mester of the Cleveland Fed have voiced support for reaching the peak rate fast and have indicated that they may have supported a larger increase at the last meeting.
Minutes from that gathering showed that “a few” participants would have voted for a bigger hike. — Bloomberg
