The president of the Federal Reserve (Fed) district in New York, John Williams, said, this Tuesday, 11, that he considers “reasonable” the expectation for another high of 25 base points (bp) in interest rates in May, which would take the base rate to peak between 5.00% and 5.25%.
In an interview with Yahoo Financethe leader conditioned the perspectives for the monetary policy to the evolution of the data.
According to him, when inflation retreats in a sustained manner, the Fed will have to reduce interest rates to “more normal levels”.
Williams pointed out that inflation in the United States has cooled in recent months, but remains well above the 2% target set by the US central bank. According to him, the Fed has recently reached a restrictive stance.
Williams, who votes at meetings of the Federal Open Market Committee (FOMC), added that he expects “modest” growth for the planet’s largest economy this year in 2023. “Unemployment will rise over the next year and , somehow, inflation will fall”, projected.
Impact of banking tensions on credit
The president of the Federal Reserve district in New York also stated that it is still too early to conclude the impact of recent tensions in the banking sector on credit. In the interview with Yahoo Financethe director emphasized that he is monitoring the effects of the failure of regional banks on the macroeconomic perspectives.
“It’s still a little unclear,” he added.
Williams added that financial conditions are tightening, given the process of monetary tightening in the world.
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