In a recent statement, New York Fed President John Williams evaluated the Fed's interest rate policy and the state of the US economy.
Williams emphasized that despite the recent pause in interest rate hikes, the FED has not announced that it has completed the rate hikes.
Williams Says They Will Continue To Increase Rates If Necessary, They Are Not Considering Rate Cuts
“The Fed has made incredible progress on monetary policy, but we need to depend on data with our monetary policy,” Williams said.
“If we need to raise rates again, we will do that.”
Williams also stated that he does not see any reason to cut interest rates this year and does not currently observe a wage-price spiral in the economy. Stating that he believes that structural changes will not harm the FED's efforts to meet the inflation target, Williams' basic forecast does not include a recession.
Williams also noted that he has seen signs of further tightening of loans and expects loans to be tighter and more expensive in the future. This may prevent the Fed from going further with rate hikes, but Williams doesn't think tighter loans will derail the economy entirely.
Williams said wage growth has slowed but stabilized at higher levels. He also assured that the banking system is robust, resilient and quite strong.
"The severe phase of stress in the banking industry is probably over," Williams said.
*Not investment advice.