Rob Kim
New York Fed President John Williams believes inflation will go back down to the U.S. central bank’s 2% goal over the next few years, he said Wednesday during a panel discussion in Manhattan.
For now, though, inflation remains stubbornly high. Headline consumer prices for January came in more than three times the Fed’s price stability objective, at 6.4% Y/Y. For the same month, wholesale inflation reaccelerated to +6.0% Y/Y, underscoring the non-linear process of squashing inflation via interest-rate hikes and balance sheet runoff.
While goods prices have retreated in the last several months, “there are some signs that this may not go quickly as hoped” amid “significant supply-chain issues,” Williams said.
Inflation pressures are also coming from a still-tight labor market, core services prices excluding shelter still elevated, a resurgence in demand after China’s recent reopening and “Europe’s been kind of doing better,” he added, noting an overall demand-supply imbalance.
Earlier, the FOMC minutes showed that a few Fed policymakers favored raising the central bank’s key rate by 50 basis points at the Jan. 31-Feb. 1 gathering.