Rob Kim
Inflation is moving in the right direction, but still remains “unacceptably” high, New York Fed President John Williams said Tuesday during an event at the University of the Virgin Islands.
The U.S. economy is starting to see supply and demand move back into balance, he said. Recall that the Federal Reserve has hiked interest rates by 500 basis points in a little over a year in its drive to tame inflation.
The Fed’s policymakers need to closely monitor economic data to assess the effects of the central bank’s actions, he said, noting that it takes time for policy actions to filter through the economy.
Traders are pricing in a 78.6% probability that the central bankers will pause rate hikes at the June meeting, according to the CME FedWatch tool.
Asked about how the U.S. defaulting on debt would affect the economy, Williams said,”We don’t know what the effects would be,” because it hasn’t happened before. “That, in itself, is a statement as to why it’s so important” for legislators to raise the debt ceiling, he said. Once the Treasury market doesn’t focus well all the other interconnecting markets globally wouldn’t function well.
On Monday, billionaire hedge fund manager Paul Tudor Jones said the Fed can now claim victory on inflation battle.
