New York Fed President John Williams reiterated that the Fed’s benchmark lending rate is at or near its highest level and stated that monetary policy is ‘quite restrictive’ (‘the most restrictive in 25 years’).

Speaking at the Bretton Woods Committee conference at the New York Fed, he said he expects it to be appropriate to maintain a restrictive stance for some time to fully restore balance and bring inflation back to our long-term 2% target on a sustained basis.

According to him, the risk of persistent inflation still weighs on the risk of a weaker economy. Today’s data showed that U.S. consumers reduced their spending in October, suggesting that the economy is shifting into a slower gear. Williams said he expects GDP to slow to 1.25% and PCE to 2.25% in 2024 (from 3% this year).

He also reaffirmed data dependence and, regarding the labor market, said he sees an increase in supply, assessing that demand is likely to decrease.

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