MNI: Fed Peak Rate 'Modestly Higher' Vs Sept SEP - Williams

New York Fed President John Williams said Monday higher underlying inflation suggests the need for a "modestly higher" path for the fed funds rate than previously indicated in September.

"Stronger demand in the economy than I previously thought and then somewhat higher underlying inflation suggest a modestly higher path for for policy relative to September, but not a massive change," he told reporters on a conference call.

Williams said he sees rates staying at a sufficiently restrictive level to achieve a 2% inflation goal probably through next year before cuts that could happen in 2024, but it will depend on the path of inflation. (See: MNI INTERVIEW: Fed's Barkin-Prices May Force Higher Rates Peak)

The median FOMC official in September forecast rates would peak at 4.6% next year.

Asked about the risks of overdoing rate increases to combat inflation, Williams said higher inflation is still the primary risk. "As we get into next year, and assuming that we've had further increases in the interest rate, and we've gotten to that sufficiently restrictive stance that we're working to get to, then the uncertainty and the risks presumably become more balanced at that point," he said.