“Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,“ Williams said in prepared remarks to be delivered before a gathering of the New York Association for Business Economics. Holding at current levels “allows for time to closely analyze incoming data, assess the evolving outlook, and evaluate the balance of risks to achieving our dual mandate goals.”
“It’s important to note that it’s still early days for the effects of tariffs, which take time to come into full force,“ Williams said. “Although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months.”
Williams said that he expects the economy to slow to around a 1% growth rate this year, and for the unemployment rate, now at 4.1%, to rise to 4.5% by year's end.
Williams weighed in on what had proved to be a tumultuous day for the central bank, as markets were buffeted by reports that Trump was moving closer to firing Fed Chairman Jerome Powell, a notion which the president later knocked down.
At the Fed's June policy meeting, officials penciled in two rate cuts for later this year and markets believe the easings could start at the September rate-setting Federal Open Market Committee meeting. That said, a small minority of Fed officials have suggested an openness to cutting rates at the July 29-30 meeting, believing that any tariff-driven inflation will be a one-off that officials can ignore - REUTERS
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