Labor Market & Inflation
Williams stated that the Fed would monitor data to determine the path of rate increases and added that inflation could persist. Some inflation numbers, like the Dallas Fed, trimmed mean, are around 3.75%, with Fed funds about 1% higher. The Fed may need to increase interest rates to achieve a restrictive rate. Williams sees financial conditions as tighter and considers a peak rate of 5-5.25% a reasonable view.
January Comments Reiterated
In January, Williams stated that the US central bank has more rate hikes ahead and noted some signs of cooling inflationary pressures. He said lowering inflation to the 2% goal will likely require below-trend growth and softening labor market conditions. He emphasized that restoring price stability is essential for maximum employment and stable prices in the long term and that the central bank must stay the course until the job is done.