Written by Michael S. Darby
NEW YORK (Reuters) – New York Federal Reserve President William Williams said on Thursday that the U.S. central bank has made considerable progress in lowering inflation but remains accommodative in monetary policy given recent economic instability. He said there was no need to move to . price pressure.
Williams told reporters after his earlier speech that monetary policy was currently in a “good position” and that given the current state of the economy, there was “no clear need to adjust monetary policy in the short term.” commented on the outlook for interest rate cuts. Federal Home Loan Bank of New York 2024 Member Symposium (New York).
In public remarks, Williams said that despite much progress toward returning inflation to the Fed's 2% goal, “the outlook remains uncertain and we must continue to rely on data.” There is,” he said. “We will continue to focus on data, the economic outlook and risks as we assess the appropriate path for monetary policy to best achieve our goals,” Williams said.
New York Fed leaders spoke a day after the release of unexpectedly strong consumer-level inflation data for March, casting further doubt on the Fed's current outlook for rate cuts at some point later this year. The unfavorable price pressure data was released at a time when other reports have pointed to strong inflation through the start of the year, casting doubt on the Fed's latest forecast for three interest rate cuts this year. is.
Some Fed officials, like Michelle Bowman, have even suggested they could raise rates again if inflation recedes further. However, Williams said in his comments to reporters that the current target range for the federal funds rate, 5.25% to 5.5%, makes a rate hike unlikely.
“Of course, there are certainly situations where higher interest rates are needed, but that's not my base case,” Williams said.
In his formal remarks, the governor said he expected inflation pressures to ease to between 2.25% and 2.5% this year, returning to the 2% target next year, but warned that “there may be difficulties along the way.'' “The recent decline in inflation is no surprise to central bankers,” he told reporters.If there was a surprise, it was the He said that this was due to the speed at which price pressures eased.
Williams also predicted economic growth would rise to 2% this year and the unemployment rate would rise moderately to 4%, before falling again next year.
Mr Williams said he expected rental inflation to ease to some extent, and said commercial real estate was an area of concern, noting it would take time to resolve issues there.
He said bank reserve levels remained high and the central bank's plans to slow its balance sheet reduction efforts did not mean the process was over.
(Reporting by Michael S. Darby; Editing by Alexander Smith and Chizu Nomiyama)