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New York Fed President John Williams said on Tuesday that the US central bank’s 2% inflation target “will likely entail a period of weak growth and some softening of labor market conditions. “
He called for real GDP increase only 1% in 2023 and see the unemployment rate rise to 4%-4.5%. That, in turn, should help the personal consumption expenditures price index, the Fed’s preferred measure of inflation, fall to 3%, still 100 basis points above the 2% target.
His unemployment forecast, compared to the current 3.4% rate, reflects the prediction of Philadelphia Fed President Patrick Harker, who is currently Don’t expect a recession This year.
“Our work [on lowering inflation] not yet done,” Williams said in a preparation speech at the NYC Regional Meeting organized by the New York Bankers Association. He cited several core inflation metrics that are still well above the Fed’s 2% target, including the New York Fed’s Multivariable Core Trend, which has trended around 3.75% over the past few months.
And leading consumer price inflation reached 6.4% year-on-year in January (unchanged from the previous month), marking the smallest increase since October 2021, but higher than the 6.2% expected, indicating inflation broadcast continues.
Earlier this month, the Federal Open Market Committee that set interest rates, in an effort to rein in persistent inflation, raised the base rate to 4.5%-4.75%, the eighth increase in a row. next. Williams said he agrees with the FOMC’s most recent statement calling for “constantly rising within the target range” to bring inflation back to 2%.
Williams said late last year that inflation can reach the target of 2% by 2025.
