Fed to keep raising US rates for months

THE US Federal Reserve will continue raising rates well into next year, one of America’s most senior central bankers has suggested.

John Williams, chairman of the New York Fed, suggested that policymakers are unlikely to back away from further rises after US inflation hit a 40-year high.

US interest rates were almost zero at the start of the year, but Mr Williams said rates they could climb to “a little bit or somewhat above” 3.5pc depending on economic conditions.

He suggested that policymakers would not necessarily revert to recordlow rates quickly, pushing back against market expectations of rate cuts in 2023.

Mr Williams said: “We’re going to need to have restrictive policy for some time. This is not something that we’re going to do for a very short period of time and, you know, change course.

“It is really more about getting policy to the right place to get inflation down and keeping it in its position.”

The comments came after Federal Reserve chairman Jerome Powell declared his “overarching focus” was to curb inflation to the target of 2pc. Policymakers have been trying to calm inflation without tipping the economy into recession with aggressive rate increases.

Mr Powell said: “While higher interest rates, slower growth, and softer labour market conditions will bring down inflation, they will also bring some pain to households and businesses. “These are the unfortunate costs of reducing inflation.”

‘This is not something that we’re going to do for a very short period of time and change course’