The policy maker said he supports raising the Fed’s benchmark interest rate to a range of 3% to 3.5% by later this year, and that the path for 2023 will depend on the data — though current bets in financial markets for rates the be around 3.5% to 4% next year are “a perfectly reasonable projection right now.”

Fed officials have pivoted to more aggressive rate increases as they fight the hottest inflation in 40 years, following criticism that they left monetary policy too easy for too long as the economy rebounded from the pandemic.

The Fed raised its benchmark interest rate earlier this month by 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%.  Chair Jerome Powell told reporters after the meeting that officials could consider another 75 basis-point increase, or a 50 basis-point hike, when they meet next month. Powell will speak on Wednesday on a panel during the European Central Bank’s annual policy forum in Sintra, Portugal.

Some other policy makers, including Fed Governor Michelle Bowman and Governor Christopher Waller, have since backed a 75 basis-point hike at their July 26-27 meeting. Minneapolis Fed President Neel Kashkari and Chicago’s Charles Evans said it would be reasonable to consider another increase of that size and San Francisco’s Mary Daly called it a good place to start the debate.

Consumer prices rose 8.6% last month from a year ago,  according to the Labor Department. The CPI report for June will be published July 13, before the Fed holds its next meeting.

“The thing I have great certainty is: We definitely need to get the funds rate up to between 3% and 3.5% later this year. That’s something I have a lot of confidence in,” Williams said. “Next year, exactly where we need to be, that’s going to depend on the data — 3.5% to 4% is a pretty good starting point to think about next year.”

The New York Fed chief also said he expects economic growth to cool and the unemployment rate to rise as the Fed hikes borrowing costs to tame inflation, but he doesn’t project a recession.

“I am expecting growth to slow this year, quite a bit, relative to what we had last year, and actually to slow to probably 1% to 1.5% GDP growth,” he said, indicating that he has one of the lower forecasts among the Fed’s 18 policy makers, based on the 1%-2% range of their quarterly growth estimates updated airier this month.

“But that is not a recession. It’s a slowdown we need to see in the economy to reduce the inflationary pressures that we have and bring inflation down.”