Fed’s Williams: Inflation is way too high right now

NY Fed President, influential FOMC member John Williams said on Friday that inflation is way too high right now, but there are some reasons for optimism that it will come down, according to Reuters.

Additional Quotes:

“Businesses that rely on people commuting to work in the office are seeing a slower recovery.”
“The Fed has to stick to a transparent and predictable as possible approach.”
“The labor market is strong and job openings are high.”
“The Fed can manage the soft landing of keeping the economy in a strong place while restoring balance between demand and supply.”
“There’s a lot of uncertainty around supply chain issues and inflation.”
Williams’ baseline outlook is that supply chain issues will gradually recede.
“Raising interest rates from near-zero levels in March makes sense under various scenarios.”

Williams said that he expects it will be appropriate to raise the Federal Funds target range in March, according to Reuters. Williams added that he then expects the Fed to begin the process of steadily and predictably reducing its holdings of treasury and mortgage-backed securities later in the year.

Williams added that his forecast for real US GDP growth in 2022 is 3.0% and for the unemployment rate to end the year around 3.0%. He continued that he expects Core PCE inflation to drop back to around 3.0% this year and then fall further in 2023 as supply issues continue to recede. Finally, Williams said that he is confident that the Fed will achieve a sustained strong economy whilst keeping inflation at its 2.0% longer-run goal.