Williams Downplays Need for Next Rate Hike Amid Inflation Concerns

US Federal Reserve Bank of New York President John Williams delivered a speech at the University at Buffalo in Buffalo, New York on Tuesday (September 29). He emphasized that there is no urgency for another interest rate hike and that the central bank has time to weigh economic data before making a decision. The September rate hike lifted the Fed's overnight target rate range by a quarter percentage point to between 3.75 per cent and 4 per cent.

Williams stated that with the policy action taken at the September meeting, there is no need for urgency. He added that watching incoming data would provide greater clarity on how the economy is performing. If the economy evolves as forecasted, one further upward adjustment of the federal funds target range may be necessary late this year to support a timelier return of inflation to target.

The Fed's main focus now is price pressures, which can be managed through monetary policy. Williams emphasized that it is imperative to return inflation to the 2 per cent target on a sustained basis. To do so, adverse inflationary disturbances must not become entrenched, and second-round effects on inflation should remain muted.