New York Federal Reserve President John Williams stated that current U.S. monetary policy remains appropriate given economic conditions and ongoing uncertainty. Speaking at an event in the Bahamas, he emphasized that the Fed’s modestly restrictive stance is justified by a strong labor market and inflation still above the 2% target.
Williams’ remarks followed the Fed’s decision to keep interest rates at 4.25%-4.50%, with expectations for cuts later this year. However, officials acknowledged significant uncertainty, partly due to the Trump administration’s policy shifts, which could push inflation higher in the short term.
While Williams refrained from specific policy predictions, he noted the economy’s strong start in 2025 and a labor market no longer driving inflation. He anticipates slower growth, partly due to lower immigration, but stressed the difficulty of predicting future trends amid fiscal, trade, and geopolitical uncertainties.
Addressing inflation expectations, Williams acknowledged recent short-term increases but noted that long-term expectations remain stable. He also supported the Fed’s decision to slow its balance sheet reduction, calling it a natural step amid financial market volatility.