Fed's Williams Threatens Rate Hikes to Tame Persistent Inflation

Federal Reserve Bank of New York President John Williams said the central bank will raise interest rates if needed to bring inflation back to its 2% target, according to an interview with Reuters.

Williams expects inflation pressures to decline gradually if energy prices and trade tariffs have peaked and the economy stays strong. He noted that 'some of the big drivers that pushed up inflation' over the last year and half 'will not be at play as much', allowing disinflationary forces to reassert themselves.

The New York Fed president said his personal forecast is for inflation to fall in the second half of this year and decline further next year. He believes current interest rate policy is 'well positioned' to return inflation to target, but emphasized that the central bank will act if necessary to achieve its goal.