New York Federal Reserve Bank President Williams (John Williams) said on Thursday (1st) that some forward-looking indicators show inflation is changing. There is still a long way to go.
“I still think we still have a long way to go in terms of what the target is for the federal funds rate and how we’re going to get tight enough next year,” Williams said in an interview with Fox Business Network. The view is that we need the federal funds rate to be higher than the inflation rate, the former needs to be higher than the latter, basically to put downward pressure on inflation.”
But when it comes to inflation, he believes there are indeed some signs that inflation is moving in the right direction.
He continued, “Commodity prices are down. We’re finally seeing some used car prices come down, including rent. We’re seeing some forward-looking indicators that inflation is moving.”
The core price index of personal consumption spending (PCE) rose 6% year-on-year in October, lower than 6.3% a month earlier, according to data released by the US Department of Commerce on Thursday. inflation has shown signs of cooling.
Williams expects US inflation to fall sharply next year, but also warns it may take 2025 to get back to the central bank’s 2% target.
“The Fed’s job is to slow down demand in order to balance supply, including the labor market, and tightening monetary policy is part of that,” he said. Inflation, we are a long way from that level.
The market generally expects the Fed to raise interest rates by 2 yards this month, bringing the benchmark interest rate to around 4.4%. The latest interest rate forecast will be released after the meeting. Fed Chairman Jerome Powell said a few days ago that the terminal interest rate could be slightly higher than the 4.6% expected in September.
