The Fed has moved in the right direction, but inflation is still far from its target.

On January 10, John Williams, president of the New York branch of the US Federal Reserve (Fed), said it was still too early to call for interest rate cuts as the bank still had a long way to go to bring inflation back to its 2% target.

At their December 2023 meeting, Fed officials maintained their interest rate target at 5.25-5.5%. (Source: Alamy)

Speaking at the Bronx EDC and BICNY's 2024 Regional Economic Outlook Conference in White Plains, New York, Williams said the Fed has seen progress in restoring balance to the economy and reducing inflation. However, the bank's work is not yet complete.

According to him, the Fed may need to maintain a tight monetary policy stance for some time to fully achieve its goals and will only ease policy when inflation approaches the 2% target.

"The economic outlook remains 'very uncertain'. Monetary policy decisions will be made at each meeting, based on the economic data received, the evolving outlook, and the balance of risks," he emphasized.

Previously, at the December 2023 meeting, officials maintained their interest rate target at 5.25-5.5%, while also hinting at some rate cuts in 2024 amid speculation that easing inflationary pressures would lead to a return to the 2% target.

This meeting has prompted markets to reassess the likelihood of an interest rate cut in March 2024, a view many investors still hold, even as some branch governors have argued in recent weeks that it is too early to say when a rate cut might occur.

The president of the New York Fed predicts that inflation will fall to 2.25% this year and 2% in 2025. According to him, the Fed is clearly on the right track, but is still far from its price stability target.

"The unemployment rate could rise to 4% in 2024," he added.

Source: https://baoquocte.vn/fed-da-di-dung-huong-nhung-lam-phat-van-con-cach-xa-muc-tieu-256958.html