MNI BRIEF: Fed's Williams Expects Interest Rates To Gradually Fall

New York Fed President John Williams said Tuesday he expects interest rates to come down gradually over the next couple of years, as inflation declines to the central bank's 2% target.

"The more important point is not about what happens at a given meeting, or over the rest of this year, but over the next few years," Williams told Fox Business, declining to make a prediction about how many interest rate cuts he expects this year. "I expect interest rates to come down gradually over the next couple of years" to "more normal levels." (See: MNI INTERVIEW: Quarterly Fed Cuts To Start In Dec - Reinhart)

Williams, the vice chair of the FOMC, said the economy is moving at a "very strong" sustainable path, and the labor market is very strong even as job growth has been "a bit overstated." The latest inflation data is "moving in an encouraging way, but I don't want to get caught up on one data release, one month, or two months of data and really watch the underlying trend," he said. "I do see a disinflationary process continuing and I expect inflation to keep coming down in the second half of this year and next year."