John Williams, Interview: Fox Business News

Inflation

“Today, the latest reading showed the PCE inflation rate. The one that we’re focused on is at 6.0% and we want it to be 2%. So to answer your question, we need to get from six to two. Honestly, I think this is going to take a couple years. My hope is that we will be at our 2% inflation goal by 2025. But importantly, I expect to see a pretty significant decline in inflation next year as supply chain issues improve as we see the slowing economy, the economy getting better and balance bringing inflation, start bringing inflation down actually over the next year. But it’s going to take a couple years to get all the way to 2%.”

Fed Funds

“Well, we’ve been doing 75 basis point increases, which by historical standards are very large increases. We needed to get the stance of monetary policy moving very quickly towards a restrictive stance. When I think of slowing that pace, I think it’s taking a step down in that pace. I still think we have a ways to go in terms of where the Fed funds target is and where we need to get it to next year in order to get the sufficiently restrictive stance. So to my mind, if we’re, at least in the near term, slowing the pace means maybe stepping down one step in terms of that pace.”

Restrictive Stance

“So if you look at the projections that we made at the FOMC in September, and I think the data flow that we’ve seen since then, we still have ways to go beyond whatever we’ll do in our upcoming meeting this month in order to get to that sufficiently restrictive stance. Exactly what that number means, it’s going to depend on the data. This is a mantra I’ve been saying for a long time. We have to be data dependent. We have to be really driven by how the economy’s performing and how do we best get to that 2% inflation goal.”