John C Williams: Restoring price stability

Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the conference "Exploring Innovations in Central Banking", organised by the Bretton Woods Committee and the Federal Reserve Bank of New York, New York City, 30 November 2023.

Central bank speech  | 
15 December 2023

As prepared for delivery 

Introduction

Good morning, everyone. Welcome to the New York Fed. We are so pleased to be co-hosting this conference with the Bretton Woods Committee.

My remarks today will focus on the economic picture in the United States, including the monetary policy actions we are taking and my outlook for the economy. Before I go further, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System.

The Dual Mandate

The Federal Reserve has a dual mandate, set by Congress, to achieve maximum employment and price stability. We are doing well on the employment side of the mandate. The unemployment rate has been below 4 percent for the past 21 months. That's the longest stretch since the 1960s. And it's in line with my 3-3/4 percent estimate of the unemployment rate expected to prevail in the economy in the longer run.

But the imbalances between supply and demand that have persisted since the onset of the pandemic have contributed to unacceptably high inflation. As measured by the personal consumption expenditures (PCE) price index, inflation surged to a 40-year high of just over 7 percent in June of last year. Since then, we have seen the inflation rate fall to 3 percent. This is a significant and welcome decline. Nonetheless, inflation is still too high.

Price stability is the bedrock upon which our economic prosperity stands and is essential to ensure maximum employment over the long term. The FOMC is committed to returning inflation to its 2 percent longer-run goal on a sustained basis.