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The key interest rate may rise above five percent

John Williams, President of the Federal Reserve District of New York

What will the Fed do to bring inflation back to the 2% target, Williams said.


(Photo: Reuters)

Washington The key interest rate in the US could rise above five percent, according to a leading central banker. “We have to do what’s necessary,” New York Federal Reserve District President John Williams told Bloomberg News on Friday.

The objective is to reduce inflation to the two percent target. For this, the endpoint for interest rates should be higher than that estimated in the most recent interest rate outlook. In projections, monetary watchdogs estimate the average rate at 5.1 by the end of 2023.

Williams expects higher volume, but not necessarily to go above 6 percent. Nor does he expect the US economy to go into recession. The US Federal Reserve recently raised the key interest rate by half a percentage point – to a new range of 4.25 to 4.50 percent. Earlier, he had made four key tariff hikes in a row – each time by 0.75 percentage points.

Federal Reserve Chairman Jerome Powell signaled more hikes in 2023 after Wednesday’s rate decision. U.S. monetary authorities expect U.S. economic output to grow 0.5 percent next year. However, this is not an economic picture that is consistent with a recessionary scenario, Powell stressed.

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Further: “We need to do a lot more”: US Federal Reserve expects key interest rate to rise above five percent