It will be appropriate for the Federal Reserve to start raising rates in March in response to high inflation and strong job growth, New York Fed President John Williams said Friday.
“With today’s strong economy and inflation well above our long-term target of 2%, it is time to begin the process of moving the target rate range back to more normal levels,” Williams said in prepared remarks for virtual event organized by New Jersey City University and the Guarini Institute for International Education and Economic Mobility.
“In particular, I hope it is appropriate to increase the target range at our next meeting in March.”
Once interest rate hikes are underway, the next step would be for the Fed to start reducing its holdings in Treasuries and mortgage-backed securities, Williams said. He expects that process to begin later this year.
Williams said he expects real US gross domestic product (GDP) to grow by just under 3% in 2022 and the unemployment rate to fall to around 3.5% by the end of the year.
He projects that inflation as measured by the PCE index will cool to around 3% and fall further next year as supply-side challenges dissipate.
Source: CNN Brasil
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