Williams from FRS: there is still a lot of work to cope with inflation

On Monday, the head of the FRB of New York John Williams said that the core price pressure stays on the same level despite the lowing inflation. This means that the Federal Reserve System should move on.   

According to Williams, high inflation hinders economic development. Besides, he added that the work of the bank still isn’t finished despite the tight monetary policy that has already started to decrease the demand and inflationary pressure.

The head of the bank didn’t speak about how the management plans to continue to pursue the monetary policy. However, he said that FRS will continue to decrease the demand to lessen inflation to the target level of 2%.

Also, Williams noted that the fight against inflation may cause declining economic growth and unemployment. Perhaps this year there will be no economic growth, and small positive shifts will appear only in a year. There is a risk that by the end of 2023 the unemployment rate will increase from 4.5% to 3.7%.

In his speech, the president of the bank noted that inflation for some goods, such as raw materials, is already falling, but this isn’t enough. Demand for goods and demand in the labor market still exceeds supply, and this leads to a significant increase in inflation.

Williams declared the bank has set a goal to bring inflation closer to 2% within a few years. Next year it may already be only 3%. Therefore, the FRS seeks to equalize supply and demand, and reduce inflation by tightening monetary policy.