We need to get to a more neutral level on rates, data will guide the timetable for this — John Williams

In an interview on Bloomberg Television, New York Fed President and FOMC member John Williams, He said the Fed needs to move quickly towards more neutral policy levels, but the data will guide the timetable for this normalization.

Additional statements:

  • We are seeing some early signs of changes in consumer spending patterns.”
  • Consumers are switching more to services.
  • “I expect that pattern to continue this year.”
  • With inflation very high, the Fed must focus on reducing inflation.
  • The job market is basically back almost to where it was before the pandemic.
  • The Fed needs to reverse policy actions beginning in March 2020.
  • The pace of rate hikes depends on the path of the economy, but 50 bps at the next meeting is a reasonable option.
  • “My base guess is that the neutral rate is still in the low 2-2.5% range.”
  • The Fed has to keep the focus on real interest rates.
  • “We need to get real interest rates back to more normal levels by next year.”
  • “We may have to go a bit above that depending on inflation.”
  • Those decisions will be made as the economy evolves.

Source: Fx Street

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