(Reuters) – Federal Reserve Bank of New York President John Williams on Thursday ratified market expectations for a half-point interest rate hike in May, saying it is a “reasonable option” given high inflation and the strength of the economy.
“We need to get to a more neutral or normal level of the fed funds rate,” though whether that would be the end of the year or exactly when will depend on the data, Williams told Bloomberg TV, adding that the Fed should get “real” interest rates — nominal borrowing costs minus expected the inflation rate — back up to a more normal level by next year. The Fed needs to take the “froth” out of the economy, he said, but can do so and engineer a soft landing at the same time.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama)
