Williams Sees Easing Inflation Pressures, Vows Fed Action if Targets Not Met

John Williams, President of the Federal Reserve Bank of New York, expressed optimism that inflation pressures will ease gradually. He believes that if energy prices and trade tariffs have peaked, and the economy remains solid, 'some of the big drivers' that pushed up inflation over the last year and a half 'will not be at play as much.' Williams said he is focused on core inflation data in the next several months to see if it's consistent with a run rate of inflation moving towards 2%.

Williams forecasts inflation to come down in the second half of this year and further next year. He reiterated that the current interest rate policy is 'well positioned' to bring inflation back to target, but noted that if the economy doesn't bring inflation back down to 2%, it would be appropriate to act.

Williams acknowledged uncertainty around the outlook due to renewed conflict in the Middle East and its impact on energy prices. However, he believes that once there's a resolution and shipping traffic resumes, improvement could be swift.