(Washington) New York Fed President John Williams said Monday that a rate cut was still expected in 2024 despite the rebound in inflation in recent months and a still vigorous economy.
“At some point we will have to begin a process to return interest rates to more normal levels. And my view is that process will probably start this year,” John Williams said on Bloomberg TV.
“I think monetary policy is in a good place right now,” he continued.
Inflation, after falling rapidly in the final months of 2023, has rebounded since January. It stood at 3.5% over one year in March compared to 3.2% in February, according to the CPI index of the Department of Labor, on which pensions are indexed.
Consequently, the American central bank (Fed), which had raised its rates to fight inflation, risks waiting before lowering them, in order to avoid an additional rebound in prices.
Market players, who until recently anticipated a first drop at the June meeting, are now instead counting on that of September, according to the CME Group assessment.
“I think the economy will continue to grow at a solid rate this year, probably not as high” as in 2023, when growth was 3.4% annualized, “but on the order of 2%,” according to the president of the New York Fed, who has permanent voting rights within the institution’s monetary policy committee.
As for tensions in the Middle East, John Williams stressed that he “does not see this as a major factor in the overall forecast for economic growth or inflation.”