Fed’s Williams: Inflation Expectations Remain Anchored, Fed to Remain Data-Dependent

Federal Reserve Bank of New York President John Williams emphasized the data-dependent nature of future monetary policy decisions in a speech on Wednesday. He acknowledged the significant uncertainty surrounding the economic outlook, particularly due to potential changes in government policy.

Williams stated that the current monetary policy stance is “well-positioned” for the current economic environment. He anticipates a moderation of economic growth to around 2% this year, with the unemployment rate remaining within a range of 4% to 4.25%.

While acknowledging the possibility of a choppy path, Williams expressed confidence that the disinflationary process will continue. He pointed to improvements in the supply and demand balance as a key factor enabling recent interest rate cuts.

The New York Fed president also noted that the balance sheet drawdown is proceeding smoothly. He emphasized that inflation expectations remain anchored, while acknowledging that housing-related inflation pressures are easing.