MNI: Fed's Williams Sees Policy Rate As Modestly Restrictive
MNI (WASHINGTON) - Modestly restrictive U.S. interest rates will keep inflation moving slowing toward 2% over the next few years, Federal Reserve Bank of New York President John Williams said Tuesday, also noting significant uncertainties around policy changes from the Trump administration and Congress.
"Monetary policy is well positioned to achieve maximum employment and price stability. The modestly restrictive stance of policy should support the return to 2% inflation while sustaining solid economic growth and labor market conditions. But it’s important to note that the economic outlook remains highly uncertain, particularly around potential fiscal, trade, immigration, and regulatory policies," he said in remarks prepared for Taft University in New York City.
Signs point to inflation continuing to descend, though it'll hover around 2.5% this year and take time to get down to 2%, he said. The labor market is not a source of inflationary pressures, measures of trend inflation are going in the right direction and inflation expectations remain anchored.
He sees the unemployment staying in a 4%-4.25% range this year, essentially flat from its 4.0% reading in January.
"The labor market is in a good balance," he said. "The cooling from unsustainably tight conditions a few years back appears to have mostly run its course." (See: MNI INTERVIEW: Fed Likely On Hold For Most Of 2025-Kroszner)