John Williams, chief executive officer of the Federal Reserve Bank of New York, speaks at an event in New York, U.S., November 6, 2019.
John Williams, chief executive officer of the Federal Reserve Bank of New York, speaks at an event in New York, U.S., November 6, 2019. Reuters / Carlo Allegri

U.S. economic growth could fall below 1% this year and remain sluggish through 2023 as the Fed acts "resolutely" to curb inflation, New York Federal Reserve president John Williams said Friday.

In prepared remarks for delivery at a campus of the University of Puerto Rico, Williams did not address whether he favored a 0.75 percentage point increase at the Fed's upcoming July meeting, something several of his colleagues have already endorsed.

But he reiterated the increasingly strong language U.S. central bankers have been using to characterize their resolve to lower inflation from its current multi-decade high to the Fed's 2% target.

"Inflation is sky-high, and it is the number one danger to the overall health and stability of a well-functioning economy," Williams said. "I want to be clear: this is not an easy task. We must be resolute, and we cannot fall short."

The three-quarter point hike approve in June, the largest incremental increase in the Federal Funds rate since 1994, was "a critical step" in tightening monetary policy.

Minutes of the Fed's June meeting showed policymakers aligned around the need to push interest rates to "restrictive" levels.

Williams said further increases will now depend on "how the economy responds to tightening financial conditions and how inflation, inflation expectations, and the economic outlook evolve."

New inflation data will be released next week, but as of May the consumer price index was rising at a more than 8% annual rate and a second measure, preferred by the Fed, was increasing more than 6%.

The economy, meanwhile, is slowing. Williams said his outlook for growth this year is now below 1%, putting him at the low end of Fed officials recent projections. A projected rebound to 1.5% next year would still leave the rate of growth below trend.

That should help ease the pressure on prices. But it will also likely raise the unemployment rate, he said.

A strong June jobs report let the jobless rate at 3.6% for the fourth month in a row.

Williams said he expected that to increase to above 4% sometime in 2023.