MNI: Fed To Move Further Toward More Neutral Stance - Williams
MNI (WASHINGTON) - New York Fed President John Williams said Monday he expects continued interest-rate reductions over time to a more neutral setting, and didn't comment specifically on the December FOMC meeting.
"Monetary policy remains in restrictive territory to support the sustainable return of inflation to our 2% goal. I expect it will be appropriate to continue to move to a more neutral policy setting over time," said Williams in prepared remarks.
The economy is in a "good place," with the labor market "solid," and inflation bumpy, but just above the central bank's 2% longer-run target, he said. "It will take some time to achieve our inflation goal on a sustained basis."
The FOMC vice chair expects GDP to grow about 2.5% this year, unemployment running between 4% and 4.25% over coming months, and inflation to be around 2.25% for 2024 as a whole. "There are reasons to be confident that inflation is on its way to 2%," he said.
Inflation rates for goods and services excluding food, energy, and housing have slowed to levels consistent with what was seen from 2002 to 2007, when core inflation was averaged around 2%, he said. Williams also sees slower housing inflation, as lower rates of rent increases for new leases are increasingly reflected in the official measures.
"Customers are increasingly pushing back against additional price increases, and margins are being compressed," Williams told the Queens Chamber of Commerce. "Another data point reinforcing my view that inflation is moving to 2% is that survey- and market-based measures show that inflation expectations remain well anchored."