On Wednesday (October 18th) local time, New York Fed Chairman John Williams stated that in order for inflation to fall back to its target, interest rates must remain at restrictive levels "for a period of time".
As the Chairman of the New York Federal Reserve, Williams is required to serve as Vice Chairman of the Federal Open Market Committee (FOMC), with permanent voting rights like Federal Reserve directors, and is considered the "number three figure" of the bank. Prior to being the Chairman of the New York Fed, he also served as the Chairman of the San Francisco Fed for nearly 7 years.
Williams and Powell are located at the core of the photo
We will persist to ensure the true 2% target is achieved, "Williams said in the conversation." We need to maintain this restrictive policy stance for a period of time
Since March last year, in order to cool demand and curb inflation, the Federal Reserve has implemented 11 rate hikes, totaling 525 basis points. At present, the target range of the federal funds rate has risen to between 5.25% and 5.5%, the highest level since 2001.
Even with such high borrowing costs, consumer spending and the labor market in the United States remain resilient. The "terrifying data" released on Tuesday far exceeded forecasts for retail sales growth, and last month's non farm employment unexpectedly surged.
However, some officials have recently stated that the Federal Reserve may not further raise interest rates and instead focus on the issue of "how long it is necessary to maintain interest rates at this level". Williams also hinted last month that interest rates are currently "at or near peak levels".
In the latest conversation, Williams stated that inflation has significantly decreased, but there is still a long way to go to reach the goal of reducing inflation to 2%. He will not declare victory in the fight against inflation.
He also mentioned that the "dot matrix" in the economic forecast released at the September meeting showed that officials expected the Federal Reserve to start cutting interest rates some time next year. He believes that the benchmark interest rate will continue to decline in the coming years, but it will depend on the data and what we will see at that time
When it comes to the recently warming geopolitical situation, Williams said, "We need to pay attention to what is happening around the world and consider what impact these crises will have on the global economy and the US economy
At the time of Williams' talk, the yield of the US 10-year treasury bond bond once rose above 4.9%, the highest level since 2007.