New York Federal Reserve President John Williams said on Tuesday it is too soon to say whether the U.S. central bank is done raising interest rates, arguing that if more action is needed policymakers won't hold back.
"We haven't said we are done raising rates" and Fed officials have not yet decided what lies ahead with possible increases in short-term borrowing costs, Williams said at an Economic Club of New York gathering. "We've made incredible progress" in taking action to lower overly high levels of inflation, but "if additional policy firming is appropriate, we'll do that," he said.
"In my forecast I see a need to keep a restrictive stance of policy in place for quite some time to make sure we really bring inflation down from 4 percent all the way to 2 . I do not see in my baseline forecast any reason to cut interest rates this year," Williams said. But for now, he said price pressures remain "too high," adding that the Fed remains committed to bringing inflation back to its 2% target. Williams also said "although we have seen some signs of a gradual cooling in the demand for labor - as well as for some goods and commodities - overall demand continues to exceed supply.
Still, Williams said the aftermath of the banking stresses will figure prominently in his thinking about the future of monetary policy. "I will be particularly focused on assessing the evolution of credit conditions and their effects on the outlook for growth, employment and inflation," he said.
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