Fed official sees inflation as ‘number 1 problem’, advocates agile tightening

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Chairman of the Federal Reserve (Fed, the US central bank) of New York and, as such, a permanent voting member of the Federal Open Market Committee (FOMC), John Williams said he expected a series of rate hikes. in the US, as the US Central Bank fights strong inflation in the country.

According to him, the rise in prices is the “number one problem” of the entity, which is very focused on reducing costs.

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“Very complex” factors are affecting supply and demand and interest rates need to rise quickly, said Williams, who forecasts another 50 basis point hike in the Fed funds rate in May.

In the long term, the interest rate path will depend on how the economy evolves, according to the central banker, who expects a significant moderation of inflation in 2023.

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Optimistically, Williams said the US economy does not need to weaken for demand levels to decline.

For him, most unbalanced sectors can be properly adjusted by the Fed’s monetary policy actions.

At the same time, he warned that the war in Ukraine will trigger further food price increases, while the current volatility in markets is largely a consequence of external factors.

Therefore, there is concern to move quickly in the monetary tightening, including the reduction of the asset balance, he highlighted.

For the chairman of the NY Fed, there is no dysfunctionality in the Treasuries market as a result of BC actions.

Source: CNN Brasil

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