>>> New York Fed President John Williams (voting FOMC member) says "I still see

New York Fed President John Williams (voting FOMC member) says "I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral"
  • It is not possible to measure the effects of trade policy actions on inflation with precision. My estimate is that increased tariffs have contributed about one half to three quarters of a percentage point to the current inflation rate. I do not see any signs of tariffs contributing to second-round or other spillover effects on inflation. In particular, inflation expectations are very well anchored, no broad-based supply chain bottlenecks have emerged, labor markets are not creating inflationary pressures, and wage growth has moderated. As a result, I expect the effects of tariffs on inflation will play out over the rest of this year and the first half of next year. Inflation should thereafter get back on track to 2 percent in 2027.
  • Given this backdrop, monetary policy is very focused on balancing the downside risks to our maximum employment goal and the upside risks to price stability. My assessment is that the downside risks to employment have increased as the labor market has cooled, while the upside risks to inflation have lessened somewhat. Underlying inflation continues to trend downward, absent any evidence of second-round effects emanating from tariffs. For these reasons, I fully supported the FOMC's decisions to reduce the target range for the federal funds rate by 25 basis points at each of its past two meetings.
  • Looking ahead, it is imperative to restore inflation to our 2 percent longer-run goal on a sustained basis. It is equally important to do so without creating undue risks to our maximum employment goal. I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions. Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals. My policy views will, as always, be based on the evolution of the totality of the data, the economic outlook, and the balance of risks to the achievement of our maximum employment and price stability goals.
  • In conclusion, central bank independence and accountability, clear communication and an explicit inflation target, and well-anchored inflation expectations have proven to be invaluable in ensuring price stability in the face of unexpected shocks and extreme uncertainty.
  • Sharp turns and unpredictable terrain have been an unavoidable part of our journey, and we must accept that shocks and uncertainty will continue to define our future. I am confident that inflation targeting strategies will continue to serve us well against any challenges we may face ahead."