By Greg Robb
New York Fed President John Williams said Tuesday he expects the economy to slow a bit, but a recession can be avoided.
“A recession is not my base case right now. I think the economy is strong,” Williams said, in an interview on CNBC.
Growth will slow “quite a bit,” Williams said, but it is the “slowdown that we need to see” to reduce the inflation pressures.
Williams said that the Fed needs to raise its policy rate into “restrictive” territory next year.
He said that the benchmark rate might hit 4% sometime next year.
This year, the Fed should raise its benchmark rate up to 3.5%, he said.
At the moment, the Fed’s benchmark rate is 1.6%.
At the next policy meeting, Fed officials will likely debate whether to raise its policy rate by 50 or 75 basis points, he said.