ANKARA

The president of the US Federal Reserve Bank of New York said on Tuesday that higher interest rates will "cool" demand in order to lower inflation.

John Williams said Russia's war on Ukraine, coronavirus lockdowns in China and supply disruptions related to the pandemic are worsening inflationary pressures in the near term and creating uncertainty about the global economic outlook.

"The challenge for monetary policy today is clear: To bring inflation down while maintaining a strong economy," he said during his speech at the NABE/Bundesbank International Economic Symposium in Eltville am Rhein, Germany.

"Although the task is difficult, it is not insurmountable. We have the tools to return balance to the economy and restore price stability, and we are committed to using them," he added.

The Fed last Wednesday raised its benchmark interest rate by 50 basis points, on top of a 25 basis point hike in March, which created fears among investors that monetary tightening could cause a recession in the US economy.

Williams, however, said he is "resolutely focused" on restoring price stability, calling it "the foundation for a vibrant and healthy economy."

"With clear signs of demand exceeding supply and an economy running too hot, the primary focus of the monetary policy is to turn down the heat and restore price stability," he said.

The New York Fed president, who is a voting member of the Federal Open Market Committee (FOMC), said he expected the FOMC will move "expeditiously" in bringing the federal funds rate back to more normal levels this year, indicating more rate hikes to come.

Williams said he expected the US economy to grow around 2% this year and the unemployment rate to remain low.