Federal Reserve Bank of New York President John Williams said on Thursday that more interest rate increases are likely as the U.S. central bank seeks to bring high inflation back down in an otherwise healthy economy.
"The economy is strong, labor market continues to strengthen, and inflation is persistent," Williams said at a UC Berkeley Alumni Salon held in New York. "We'll need to take actions over time that will ensure that we get inflation back to our 2% goal in a timely manner and on a sustained basis," he said, adding, "We still have work to do … to get monetary policy to the right place."
Williams did not say when he expects the Fed to raise rates again or how far it will go. Financial markets broadly expect the central bank to lift its current 3.75% to 4% federal funds target range by a quarter percentage point at the next Federal Open Market Committee meeting in early December, and then to raise rates again in January.
His remarks followed hotter-than-expected October consumer inflation data and came hours before Friday's producer-price report, which showed producer prices rising 0.3% in October — cooler than the 0.4% economists had expected. Core inflation rose 0.3% in October, a pace that Fed Governor Christopher Waller had earlier said would put a 50-basis-point hike on the table for December.
Williams was not alone in sounding hawkish on Thursday. Chicago Fed President Austan Goolsbee sounded an inflation alarm at Yahoo Finance Invest, and San Francisco Fed President Mary Daly also backed more tightening, with broad agreement among officials that further tightening is needed — though less agreement on how quickly it should be delivered.
Williams also cautioned that while monetary policy can slow future inflation, it cannot readily reverse the higher price level already accumulated without imposing substantial economic costs — a point that frames the Fed's December 8-9 meeting as a debate over pace rather than direction.
