(Nov 6): Federal Reserve Bank of New York president John Williams endorsed the US central bank’s statement saying that this is the time to collect information on the risks to prices.

Speaking at an event at the European Central Bank in Frankfurt on Friday, he said that inflation is “absolutely too high”, though other indicators so far aren’t signalling concern. 

Monetary policy “does have a critical role in making sure that these relative price shocks don’t translate into broader or more persistent inflation,” Williams said. “Inflation expectations remain well anchored. We’re seeing wage growth be consistent with our 2% goal.” 

Fed officials held interest rates steady last month, saying the “accumulation of more information” would allow them to determine the best level for policy. The 10-2 decision to stay put followed a unanimous move to lift their benchmark rate in September by a quarter point to a target range of 3.75-4%.

Several policymakers speaking since the meeting have touted the need for additional rate hikes but advocated for a gradual approach. The public statements followed comments from chairman Kevin Warsh, who pointed to a strong economy and warned about persistent inflation, but continued to abstain from sharing his outlook for rates. 

“Our FOMC [Federal Open Market Committee] statement last meeting, I think, captures correctly that this is an appropriate time to accumulate more information to help us determine what the appropriate stance of policy is to make make sure we achieve a timely return to our 2% target,” Williams said. 

The Fed’s preferred inflation measure, the personal consumption expenditures price index, rose by 3.6% in September from a year earlier, and gauges of underlying inflation excluding food and energy items also rose. Data also showed the US economy expanded at the fastest pace in a year in the quarter ending September. 

“A couple of themes are really interesting, both for us and around the world: a very unusual set of relative price shocks affecting our economies, at the same time very strong resilience at least our economy through these shocks,” Williams said.

He spoke just days after US Democrats saw decisive victories in Tuesday’s midterm elections, taking control of Congress in a shift that Fed watchers said could protect the central bank and give officials more room to fight inflation without political interference. 

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