New York Fed president sees no need to rush another rate hike — Channel NewsAsia
In Buffalo, United States, Federal Reserve Bank of New York President John Williams said the Federal Reserve will likely need only one more interest rate increase this year to bring inflation back to its 2% target. He noted that following the decision made at the September meeting, there is no need for urgent further steps.
As Channel NewsAsia reports, Williams spoke at the University at Buffalo on September 29. According to him, the regulator should assess new economic data before determining its next decisions, as this would provide a clearer understanding of the state of the economy.
Likely decision at the end of the year
Williams suggested that one additional adjustment to the target range for the federal funds rate could be appropriate at the end of the year if the economy develops in line with his forecast. At the same time, he stressed that this was only his own assessment, and that the final decision would depend on timing and the full range of economic indicators.
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Two weeks before his speech, the Fed raised the target range for the rate by 0.25 percentage points, to 3.75–4%. Most central bank officials then signaled that another rate hike this year could be justified. After Williams' remarks, financial market participants lowered expectations for an October increase and began forecasting one Fed move this year, most likely in mid-December.
Inflation remains above target
Economists surveyed by Reuters expected inflation, measured by the indicator the Fed uses as its benchmark, to rise by 3.7% year-on-year in August, nearly twice the regulator's target. Williams forecasts that inflation will end the year at about 3.5%, while price pressures will ease next year. He expects inflation to return to 2% in 2028.
Chicago Fed President Austan Goolsbee also said the regulator needs evidence that inflation is declining. At the same time, he expressed hope that the Fed would eventually be able to move toward cutting rates.
