by Michael S. Derby
NEW YORK (Reuters) – The U.S. Federal Reserve may raise interest rates next year beyond the current forecast, New York branch president John Williams said on Friday.
“We’re going to have to do whatever it takes” to bring inflation back to the Fed’s 2% target, he said in an interview with Bloomberg TV.
He added that tight monetary policy was needed and that the peak rate 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), which is responsible for setting interest rates, stressed that inflation remained “stubbornly high” and that the economy continued to “resist students with higher interest rates”.
Asked whether he should raise rates to 6-7%, John Williams said “that was certainly not his base case.”
The president of the Federal Reserve in New York also assessed that the slowdown in the economy was not inevitable, specifying that in light of the current outlook from 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.
(Reporting by Michael S. Derby; French version by Claude Chendjou; Editing by Kate Entringer)