Fed’s Williams says inflation is too high but will start to fall soon | Wilnesh News

NEW YORK – New York Federal Reserve Bank President John Williams said Thursday that inflation remains too high but he is confident it will begin to slow later this year.

With markets nervous about the direction of monetary policy, Williams did not make clear his stance on a potential rate cut. Instead, he reiterated the central bank’s recent stance that there is a “lack of further progress” in achieving its goals as inflation data this year have mostly been higher than expected.

“The honest answer is, I just don’t know,” Williams said during a Q&A session with the Economic Club of New York and CNBC’s Sarah Eisen. “I do think monetary policy is restrictive and is bringing a better balance to the economy. So I think, based on the data, at some point domestic interest rates will eventually need to come down. But the timing will depend on how you achieve your goals. What is the situation.

Williams called the policy “well-positioned” and “restrictive” and said it was helping the Fed achieve its goals. Regarding a potential rate hike, he said, “I don’t think that’s likely to happen.”

Earlier this year, the market had expected the Federal Reserve to cut interest rates significantly this year. But higher-than-expected inflation data has significantly changed the landscape, with pricing now only expected to drop once, probably in November.

“As the economy moves toward equilibrium over time and deflation emerges in other economies, lowering global inflationary pressures, I expect inflation to resume slowing in the second half of the year,” Williams said. “But let me be clear One point: Inflation remains above our long-term goal of 2%, and I am very focused on ensuring that we achieve our dual mission goals.”

For the past year, the Federal Reserve has been on hold, maintaining its benchmark borrowing rate in a range of 5.25%-5.5%, the highest level in 23 years.

The Fed is seeking to keep the labor market strong and bring inflation back to its 2% goal. Most inflation measures are currently near 3%; the Commerce Department will release a key report on Friday.

Inflation, measured by the Fed’s preferred metric, the personal consumption expenditures price index, is expected to hit 2.7% in April, according to Dow Jones estimates. Williams said he expects PCE inflation to fall to 2.5% this year and rise to 2% in 2026.

“We have made great progress toward our goals over the past two years. I am confident that we will restore price stability and lay the foundation for continued economic prosperity. We are committed to getting this done,” he said.