by Michael S. Derby
NEW YORK (Reuters) – The U.S. Federal Reserve (Fed) could raise interest rates next year beyond its current forecast, New York branch chairman John Williams said on Friday.
“We are going to have to do what is necessary” to bring inflation back to the Fed’s 2% target, he said in an interview with Bloomberg TV.
He added that a tight monetary policy was needed and that the rate peak estimated at 5.1% in the latest projections from the US central bank “could be higher than what we have written”.
John Williams, who is also vice chairman of the Federal Open Market Committee (FOMC) responsible for setting rates, stressed that inflation remained “stubbornly high” and that the economy continued to “resist higher interest rates students”.
Asked if interest rates should be raised to 6-7%, John Williams said “that was definitely not his base case.”
The President of the Federal Reserve of New York also judged that the slowdown in the economy was not inevitable, specifying that in view of the current outlook of the Fed, he did not see this as a recession. “We’re clearly not in a recession right now,” he said.
“We are absolutely determined to bring inflation back to our 2% target, and we are acting in this direction,” he added.
(Report Michael S. Derby; French version Claude Chendjou, editing by Kate Entringer)
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