In remarks delivered during a regional visit to Long Island on February 28, 2024, New York Fed President John C. Williams discussed the progress made in restoring price stability to the economy, as well as the work still needed to return inflation to 2 percent.
He said:
“While the economy has come a long way toward achieving better balance and reaching our 2 percent inflation goal, we are not there yet.”
“I am committed to fully restoring price stability in the context of a strong economy and labor market.”
“As we navigate the remainder of this journey, I will be focused on the data, the economic outlook, and the risks, in evaluating the appropriate path for monetary policy that best achieves our goals.”
In his speech, President Williams said 2023 was a turning point for the U.S. economy. “Demand came into better balance with supply,” he said. “And the economy grew far faster than anyone expected a year ago.”
“At the same time, the labor market remained strong, with the unemployment rate under 4 percent—a mark it’s held for the past two years, the longest stretch in five decades,” he said. “And inflation—as measured by the personal consumption expenditures (PCE) price index—continued to decline from its 40-year high of about 7 percent in mid-2022, reaching about 2-1/2 percent last year.”
The Federal Open Market Committee (FOMC) has “put in place a restrictive stance of monetary policy with the aim of bringing inflation back to 2 percent on a sustained basis,” President Williams said. But he noted there could be “bumps along the way” to achieving that inflation target.
President Williams delivered his speech at the Cradle of Aviation Museum, which houses a Lunar Module, and he used the mission to send astronauts to the moon as a metaphor for the economy.
“Like traveling to the moon and back, inflation shot up, then came back down,” he said. “And as with the Apollo missions, it’s the safe return home that’s essential. While we’ve seen great progress toward achieving our goals, the journey is not yet over, and I am very focused on making sure we complete this mission successfully.”
Taking into account the effects of the FOMC’s restrictive monetary policy, President Williams expects:
- GDP growth to slow to about 1-1/2 percent this year
- The unemployment rate to rise modestly, peaking at around 4 percent
- PCE inflation to move to about 2 to 2-1/4 percent this year and 2 percent in 2025
Judy DeHaven is an executive communications specialist at the New York Fed.
The views expressed in this article are those of the contributing authors and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
