Williams did not address whether he favors a 75 basis-point rate hike
• Williams did not address whether he favors a 75 basis-point rate hike
• He forecasted jobless rate to increase to above 4% sometime in 2023
US economic growth could fall below 1% this year and remain slow through the next year as the central bank acts “resolutely” to curb inflation, New York Federal Reserve President John Williams said on Friday.
“I want to be clear: this is not an easy task. We must be resolute, and we cannot fall short,” reiterating the increasingly strong language that Fed Chair Jerome Powell has been using to characterize resolution to lower inflation from its current multi-decade high to the Fed’s 2% target.
Although Williams did not address whether he favors a 75 basis-point rate hike at the Fed’s upcoming July meeting, several of his colleagues have already endorsed it.
Williams said further increases will now depend on “how the economy responds to tightening financial conditions and how inflation, inflation expectations, and the economic outlook evolve.”
Williams said his growth outlook for this year is below 1%, putting it at the low end of Fed officials’ recent projections.
A projected rebound to 1.5% next year would still leave the growth rate below trend.
That should help ease the pressure on prices. But it will also likely raise the unemployment rate, he said.