Fed’s Williams: Expects inflation to decline to around 3.25% this year

Federal Reserve Bank of New York President John C. Williams said in prepared remarks at the Housatonic Community College in Connecticut that the economic outlook is uncertain and that their decision will be driven by the data. He expects real GDP to grow modestly in 2023 and to pick up next year. 

Key quotes:

“One aspect of inflation that’s important for achieving and sustaining price stability is the anchoring of inflation expectations. Various measures of longer-run inflation expectations have remained well anchored at levels consistent with our 2 percent goal.”

“While the FOMC has taken decisive steps to bring inflation down, lags exist between policy actions and their effects. It will take time for all of our inflation gears to move at a pace that takes us to our 2 percent target. I expect inflation to decline to around 3-1/4 percent this year, before moving closer to our longer-run goal in the next two years.”

“I expect real GDP to grow modestly this year and for growth to pick up somewhat next year. Slower growth and tighter monetary policy will likely lead to some softening in the labor market. So, I anticipate unemployment gradually rising to about 4-1/2 percent over the next year.”

“The economic outlook is uncertain, and our policy decisions will be driven by the data and the achievement of our maximum employment and price stability mandates. I am confident that our actions will bring inflation down to our 2 percent longer-run goal.”