U.S. economic data in recent weeks points to the need for higher interest rates, said New York Federal Reserve President John Williams on Wednesday.
“I think we have more work to do,” Williams said, during a moderated discussion at the annual meeting of the Central Bank Research Association.
“I think the incoming data support that hypothesis,” he added later.
The Fed’s dot-plot forecast for interest rates shows 16 out of 18 Fed officials projected one more rate rise and 12 of 18 projected two more hikes.
Williams did not specify which camp he was in.
He was “not content with where inflation is…it’s far too high.”
Traders in derivative markets are pricing in about one and a half rate hikes before the end of the year.
Williams said the rebound in the housing market was “a bit of a surprise” to Fed officials.
The economy and not just housing has handled the Fed’s rate hikes reasonably well, he said.
Minutes of the Fed’s June policy meeting, released earlier Wednesday, show there is a debate among the central bankers over whether the cumulative effects of the Fed’s rapid rate hikes over the past year has yet to hit the economy.
Hawkish members of the Fed think that much of the effects of past monetary tightening, known as lags, “have already been realized.”
Williams said he thinks some of the broader negative effects, like those on consumer spending, “might take a year or two” to hit the economy, suggesting he thinks there are some more effects to come.
U.S. stocks
DJIA,
SPX,
ended lower on Wednesday, while the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.94%.
This story originally appeared on Marketwatch
