The Zhitong Finance App learned that New York Federal Reserve Chairman Williams, who is the “top three” of the Federal Reserve and has permanent voting rights, said he approved the Federal Reserve's previous statement that now is the time to collect price risk information.
Williams said at an event held by the European Central Bank (ECB) in Frankfurt on Friday that inflation is “definitely too high,” but other indicators have not sent worrying signals so far.
According to Williams, monetary policy “does play a key role in ensuring that these relative price shocks do not evolve into broader or more enduring inflation.” “Inflation expectations remain firmly anchored. The wage growth we are seeing is in line with the 2% target.”
Federal Reserve officials kept interest rates unchanged last month, saying “accumulating more information” would help them determine the best level of policy. This no-go decision, which was passed with 10 votes in favor and 2 against, followed an agreement in September to raise the benchmark interest rate by 25 basis points to the target range of 3.75% to 4%.
Since that meeting, a number of policymakers have emphasized the need for further interest rate hikes in public statements, but advocated a gradual approach. These public statements came after Chairman Kevin Walsh's speech — Walsh indicated strong economic performance and warned of continuing inflation, but still did not reveal his views on the path of interest rates.
Williams said, “I think the FOMC statement at our last meeting accurately shows that now is the right time to accumulate more information to help us determine what policy positions are appropriate to ensure that inflation returns to the 2% target in a timely manner.”
The Federal Reserve's preferred inflation indicator, the personal consumption expenditure (PCE) price index, rose 3.6% year on year in September, and the core inflation index excluding food and energy also rose at the same time. The data also shows that in the quarter ending September, the US economy recorded the fastest growth rate in a year.
“There are a few topics that are really interesting, both for us and globally: a very rare set of relative price shocks are affecting economies, while at least our economy is showing great resilience in the midst of these shocks,” Williams pointed out.
A few days before he made these remarks, the US Democratic Party won a decisive victory in Tuesday's midterm elections to seize control of Congress. Federal Reserve observers say this change may protect the central bank and give officials more room to fight inflation from political interference.