New York Fed President John Williams said US inflation is too high and must return to 2%. He added that growth has remained resilient, the labour market is remarkably stable, and inflation expectations remain well anchored. Markets see a more than 50% chance of a Fed rate hike in December.
New York Federal Reserve President John Williams said inflation is too high and must be brought back to 2%. He spoke on Friday at a European Central Bank conference in Frankfurt.
According to Reuters, Williams told the conference: "Inflation is absolutely too high. It’s been too high for too long," he said. He called it essential to return to the 2% target in a timely manner and on a sustained basis.
However, Williams said US economic growth has remained resilient and the labour market is remarkably stable despite successive shocks. He argued that the Fed should focus on where inflation is heading and make sure current shocks do not turn into broader or more persistent inflation.
On that point, he said the Fed is not seeing that happen so far, with inflation expectations well anchored. Wage growth, he said, is consistent with the 2% goal, he thinks.
Williams did not discuss what the Fed's next policy move should be. Yet he said the bank's last policy statement correctly concluded that it was appropriate to collect more information on the right policy stance.
Financial markets see a more than 50% chance of a rate hike by the Fed in December, while a move by March is fully priced in.
Source: Reuters via Investing.com
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