Federal Reserve Bank of New York President John Williams is anticipating more rate hikes ahead and sees signs that price rise pressures might be starting to cool off.
“With inflation still high and indications of continued supply-demand imbalances, it is clear that monetary policy still has more work to do to bring inflation down to our 2% goal on a sustained basis,” Williams said in the text of a speech to be delivered before the Fixed Income Analysts Society in New York, according to Reuters.
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The central bank official noted that bringing inflation down may require a period of below-trend growth and some softening of labor market conditions.
“Restoring price stability is essential to achieving maximum employment and stable prices over the longer term, and it is critical that we stay the course until the job is done,” Williams said according to the report.
Major Wall Street indices closed in the red on Thursday after U.S. unemployment data showed the labor market continues to remain resilient, a factor considered to be crucial in driving the Federal Reserve’s future policies. The weekly jobless claims fell by 15,000 to 190,000 while continuing claims increased by 17,000 to 1.647 million.
The SPDR S&P 500 ETF Trust SPY closed 0.73% lower while the Invesco QQQ Trust Series 1 QQQ lost 0.98%.
Inflation Expectations: Williams also stated some economic trends are moving the way the central bank would like and said inflation should come down to 3% this year and will return to the 2% target over the next few years.
The central bank official’s concern for the year remains high inflation while he expects growth to moderate to 1% in 2023. “Robust hiring, low unemployment, and strong nominal wage growth mean the labor market remains remarkably tight,” he said.
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