Federal Reserve (Fed) policymaker John Williams said that the central bank always has the option to raise interest rates if inflation does not return to the 2% target.
He said, interest rates will take time to have an impact on the economy before inflation returns to the desired level.
Therefore, he does not see that inflation can come down to the central bank's target until the next two years.
The New York Fed president also said that unemployment may rise to 4%-4.5%, from the current 54-year low of 3.4%.
Last week, the Federal Open Market Committee (FOMC) decided to raise its interest rate by 25 basis points to a target range of 5%-5.25% and also indicated to stop the increase.
However, investors should probably not jump to conclusions on last week's FOMC decision.
This is because, Williams said that the Fed has not confirmed that they have finished raising rates.
Therefore, to ensure that its goals are achieved, the central bank will continue to assess what is happening in the economy and make decisions based on that data.
In addition to that, he also does not see interest rate cuts likely this year, adding that additional rate hikes are likely if the data does not cooperate.
