Geoffrey Smith

Investing.com – The U.S. economic system is strong enough for the Federal Reserve to tighten monetary policy during its most recent meeting. New York Fed President John Williams stated in a Tuesday speech that the Fed had made this statement.

Williams addresses a German central bank conference. saidThe Fed policy will cool the overheated labor and housing markets, but not stop the economy growing. He stated that he expects gross domestic product (GDP) to increase by around 2% in 2018, even though the Fed raises interest rates to levels high enough to lower inflation.

Williams answered questions and was quoted as saying by media wires that he believes the Fed will engineer a “soft landing”. He also stated that he believed the Fed would maintain its low unemployment rate of 3.5%. Inflation, measured as the core index for, would fall to 2.5% per year on average from around 4% last year. This is finally “close to” the Fed’s target of 2% in 2024.

Williams’ speech did not suggest that financial market volatility following the Fed’s second half-point in 20 years was a cause for concern. He emphasized that higher interest rates are the best tools to cool the housing market’s interest rate sensitive market, and to balance a labor market in which demand exceeds supply.

Williams said that Williams would not advocate for larger rate hikes than those currently being guided by the Fed. At his last press conference, Chairman Jerome Powell stated that half-point rate increases would be addressed in the coming meetings.

Williams stated that “Our monetary policies will reduce the demand side” of the equation. I also believe that the causes of supply shortages can be addressed over time so that some of this rebalancing can be achieved through an increase in supply in both the United States as around the globe.

Williams will be the first among a number of Fed officials to appear in public on Tuesday. The Richmond Fed’s Tom Barkin, Atlanta’s Raphael Bostic, and Minneapolis’ Neel Kazhkari and governor Chris Waller are due to appear early, respectively. Loretta Mester from Cleveland is due later.