Inflation is still “stubbornly high,” and the Federal Reserve will raise interest rates as much as necessary to bring price pressures back under control, a senior central bank official said on Friday.
John Williams, president of the New York Fed, said in an interview with Bloomberg that inflation has started to ease but that it needs to slow a lot further before the Fed eases up on the monetary brakes. The Fed also signaled it plans to raise the so-called fed-funds rate to as high as 5.25% in 2023. Williams said his colleagues expect it to get to 5% to 5.5% next year.In market parlance, a real interest rate is one that is above inflation. The rate of inflation right now, using the Fed’s preferred personal-consumption-expenditures, or PCE, price gauge, is 6%. That’s markedly higher than the current 4.25% to 4.5% fed-funds rate.
Interest rates higher than the inflation rate would destroy the economy.
Smh