New York Federal Reserve Bank President John Williams said on Tuesday that the central bank would likely need to raise interest rates above 3.5% to put downward pressure on inflation and drive demand to better levels than with the limited offer.
Inflation is expected to be between 2.5% and 3% next year, he said, which means that interest rates at 3% to 3.5% will neither “brake” the economy, but neither will it boost the economy.
“My view is that yes, we’re going to need to go a little bit further than that,” Williams said in an interview with the Wall Street Journal.
The official also said that the central bank will continue to raise interest rates as part of its effort to reduce inflation and then need to keep them there until the end of 2023.
“What we need to do is get inflation down, balance demand with supply – and that’s going to take longer, it’s going to continue into next year,” Williams noted.
“Based on what I see from the inflation data and what I see in the economy, it will take some time before I see the need for downward rate adjustments,” he added.
Source: Capital
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