NY Fed's Williams: Inflation is moving gradually in the right direction

NY Fed President Williams is speaking and comments are starting to trickle in.

• The economy is facing unacceptable high inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term
• Inflation is moving gradually in the right direction
• Expects economy to continue to grow this year
• There are lag effects for central bank policy. It does take a while to feel the impact of policy.
• Do need to monitor economic feedback from Fed's actions
• We don't know what the effects would be if the US default because it has never happened before
• Current banking situation is nothing like the 2008 banking crisis
• We are watching is CRE (commercial real estate) closely and the risks it poses to banks
• Banking system is sound/resilient

Williams is speaking at an event organized by the University of the Virgin Islands

Williams last spoke on May 9th and said a lot. Below are his comments from his prepared remarks and Q&A.

• He is confident US central bank Central bank A central bank is a financial institution that manages a country's monetary policy, and that often also includes issuing and/or monitoring the currency and regulating the money supply. Central banks also typically act as a lender of last resort to banks in times of financial crisis, and may also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan.The chief task A central bank is a financial institution that manages a country's monetary policy, and that often also includes issuing and/or monitoring the currency and regulating the money supply. Central banks also typically act as a lender of last resort to banks in times of financial crisis, and may also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan.The chief task Read this Term is on right path to lower inflation to 2% target
• Williams acknowledges the issue of high inflation, which disproportionately affects those who can least afford higher prices for food, shelter, and transportation.
• The Federal Reserve is committed to bringing inflation down, with price stability being essential for the economy to reach its full potential and sustain maximum employment over the long term.
• Imbalances between demand and supply persist, leading to high inflation and a tight labor market; some signs of gradual cooling in demand for labor and goods/commodities are present.
• Job growth has been robust, with unemployment rate at a historically low level of 3.4%; labor force participation has rebounded, helping to alleviate some labor market imbalances. Projects unemployment rate to rise to 4% – 4.5% this year
• Inflation remains too high, but has moderated from a 40-year high of 7% to 4.2%; various measures of longer-run inflation expectations remain well anchored at levels consistent with the Fed's 2% longer-run goal.
• Core services excluding housing still show persistent inflation due to imbalances in overall supply and demand; it will take the longest to bring down.
• it will take time for the Fed rate hike's to bring economy back into balance
• Williams expects inflation to decline to around 3-1/4% this year before returning to the longer-run goal of 2% over the next two years; real GDP growth is expected to be modest this year, picking up somewhat next year.
• Monitoring the totality of the data and its implications for the achievement of the Fed's goals is crucial.

Q&A comments:

• The Fed has not said it's done raising rates
• Fed estimating incredible progress on monetary policy
• Fed needs to be data dependent with monetary policy
• Fed will raise rates if needed
• Does not see any reason to cut rates thisyear
• We are not seeing a wage price spiral today
• Fully confident US can get inflation back down to 2%
• Structural shifts will not impair Fed work to hit inflation target
• Recession not in baseline forecast
• Economy has risks to both the up and down side
• Sees signs of further tightening of credit; expects it to affect economic growth
• Tighter credit may blunt how far Fed goes with rate hike's
• Does not see tighter credit knocking economy totally off course
• Wage growth has stabilized at a high level. Wage data suggests labor market is still very strong.
• Banks are sound and resilient and quite strong. Acute phase of stress is about over