A top Federal Reserve official anticipates that interest rates need to rise further and stay high for some time as the central bank remains committed to corralling stubbornly high consumer prices.
In a speech on Monday, New York Fed President John Williams said that policymakers have more work to do in order to control inflation, which remains "far too high."
"My baseline view is that we’re going to need to raise rates further from where we are today," he said during an event held by the Economic Club of New York. "I do think we’re going to need to keep restrictive policy in place for some time. I would expect that to continue at least through next year."
The Fed raised rates by 75 basis points at the beginning of November for the fourth straight meeting as it tries to wrestle inflation closer to its 2% target with the most aggressive tightening since the 1980s.
Traders widely expect the Fed to approve a smaller half-point rate hike at the conclusion of its next two-day meeting on Dec. 14, although 32% still anticipate another super-sized, 75-basis-point increase.
Williams said nothing to sway markets against that expectations.
Inflation using the Fed's preferred measurement, the personal consumption expenditures price index, climbed 6.2% in September from the previous year.
Williams said he expects inflation to settle between 5% and 5.5% by the end of the year and between 3% and 3.5% next year. The Fed's target is 2%.
The comments from Williams echoed those from Fed Chairman Jerome Powell earlier this month. Powell struck a hawkish tone during his post-meeting press conference Nov. 2 after Wall Street interpreted a new line in the Fed's updated statement to mean the central bank was considering slowing its aggressive rate hike path in coming meetings.
"Let me say this," Powell told reporters, "it is very premature to be thinking about pausing. When people hear lags, they think about pauses. It's very premature, in my view, to talk about pausing our rate hikes. We have a way to go."