John Williams, president of the Federal Reserve Bank of New York, said interest rates should be maintained with a "restrictive stance for quite some time" to bring inflation back to the 2% target.
"Inflation surged to a 40-year high of just over 7%in June of last year. Since then, we have seen the inflation rate fall to 3 percent," Williams said in prepared remarks for an event Thursday. "This is a significant and welcome decline. Nonetheless, inflation is still too high."
The New York Fed president made the comments in reference to the inflation measured by the Personal Consumption Expenditure index, which slowed in October to the lowest level since March 2021.
Williams said he expects the PCE inflation to be around 3% this year, slow to 2.25% in 2024 and to 2% in 2025. He mentioned that prices of rents should help bring inflation down.
"My assessment is that we are at, or near, the peak level of the target range of the federal funds rate," he said. "But our work is not nearly done."
The Fed meets Dec. 12-13 to decide on interest rates. The U.S. central bank maintained its key rate unchanged in the range of 5.25% to 5.50% on Nov. 1, the highest level in 22 years.
Williams said he expects GDP growth to slow to about 1.25% next year and unemployment to rise to 4.25%.
