New York Fed’s president John Williams says raising rates would be a positive event for the U.S. economy.

On Friday, New York Fed President John Williams said the Federal Reserve raising interest rates next year would signal the central bank good feeling about the country’s economic recovery. In an interview with CNBC’s Steve Liesman on Squawk Box, “I go into next year feeling [like] the baseline outlook is a very good one. Therefore, actually raising interest rates would be a sign of a positive development in terms of where we are in the economic cycle,” “I’m pretty optimistic that we’re seeing really strong improvements in the labor market. You’re seeing the unemployment rate come down quickly,” Williams added. His comments came after the Fed signalled earlier this week that it sees as many as three rate hikes in 2022. The Fed cut rates to near-zero levels in March 2020 as part of its efforts to support the economy at the onset of the Covid-19 pandemic. The central bank also said it would aggressively dial back its bond-buying program this week.

That rate forecast comes during an increase in U.S. inflation. The consumer price index — which tracks the price of everything from cars to food to rent — surged 6.8% in November on a year-over-year basis. That marks its fastest acceleration since 1982. The producer price index — another inflation measure that tracks wholesale prices — increased last month by 9.6%, its most rapid pace on record. “We’re very focused on inflation; it is obviously too high right now,” Williams said. “We want to make sure inflation comes back down to our 2% longer-run goal.” However, Williams noted that the Fed doesn’t need to further speed up the tapering of its asset purchase program to temper the recent inflation surge.

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