Fed's Williams says Fed needs more rate rises to cool inflation

By Michael S. Derby NEW YORK (Reuters) - Federal Reserve Bank of New York President John Williams said on Thursday the U.S. central bank has more rate hikes ahead and

sees signs inflationary pressures might be starting to cool off from torrid levels. “With inflation still high and indications of continued supply-demand imbalances, it is

clear that monetary policy still has more work to do to bring inflation down to our 2% goal on a sustained basis,” Williams said in the text of a speech to be delivered before the

Fixed Income Analysts Society in New York. “Bringing inflation down is likely to require a period of below-trend growth and some softening of labor market conditions,”

Williams warned. He added that “restoring price stability is essential to achieving maximum employment and stable prices over the longer term, and it is critical that we stay the

course until the job is done.” Williams, who also serves as vice-chairman of the Federal Open Market Committee (FOMC), did not specify in his prepared remarks what size

rate increase he would like to see at the next FOMC meeting, scheduled for Jan. 31-Feb. 1. But he did not push back on market expectations that the Fed will lift rates by a

quarter percentage point then. A number of other Federal Reserve officials have expressed support for a downshift in the pace of rate rises. Last year, the Fed moved

its short-term interest rate target higher at a historically aggressive pace in a bid to fight the highest inflation seen in decades. It moved from a near zero federal funds rate

in March to between 4.25% and 4.5% by year's end. A number of those increases happened in super-sized 75 basis point increments.