Fed's Williams (Voter, Neutral) says the number one issue is inflation, it is running far too high and persistently so. Goal is to get the economy back in balance

ECONOMY

Bringing the economy back into balance is a challenging task, committed to doing this.
Not seeing signs of market dysfunction within the Treasury market.
Events in China and Ukraine war are major drivers of the market volatility.
Plans to reduce the balance sheet is having an effect on longer-term interest rates.
Have already seen a tightening of US financial conditions than we'd seen in all of 1994.
We need to get real interest rates back to zero.
Sectors most out of balance are the ones that are rate sensitive.
Need to acknowledge the world is changing and adjust to that as needed.

INFLATION

His expectation is inflation will be coming down quite a bit next year.
Reiterates 50bps rate hikes make sense at upcoming meetings.
Seeing inflation in a broad set of goods.
Without price stability, will not achieve growth and employment opportunities.
Starting to see some impact of inflation on spending habits.
Job Number 1 is to bring inflation down.
Thinks we will be in this situation for a while.
We don't know exactly how long inflation will stay high, right now trying to communicate out as far as we can.

BALANCE SHEET

MBS cap of USD 35bln is a "big number"; does not expect to hit the MBS cap each month.
MBS sales in the future might be an option to bring the balance sheet more closely to long-run goal of mostly Treasuries.
Balance sheet reduction itself will occur over the "next few years".
Primary tool is the Fed Funds Rate
Need to understand what the effect of MBS sales would be and consider market functioning carefully.

HOUSING MARKET

Not seeing a lot of risk taking by mortgage lenders, we're seeing high rents as well as high home prices.
Need more housing supply to meet demand,
Seeing more increases in rent that we have not seen before.

JOBS