Exclusive-Fed's Williams welcomes inflation data, not ready to seek rate cuts
NEW YORK - Federal Reserve Bank of New York President John Williams welcomed the arrival of softer consumer inflation data, he told Reuters, but said that positive news is not enough to call for the U.S. central bank to cut interest rates sometime soon.
Monetary policy is "restrictive" and "is in a good place," Williams said. "I don't see any indicators now telling me ... there's a reason to change the stance of monetary policy now, and I don't expect that, I don't expect to get that greater confidence that we need to see on the inflation progress towards a 2% goal in the very near term."
April's headline CPI rose 3.4% from a year earlier, down from 3.5% in March, while prices excluding food and energy rose 3.6%, the smallest increase in three years.Williams' remarks offered his first extensive take on monetary policy and the economic outlook since the FOMC met this month and held the policy rate at 5.25%-to-5.50%, where it has been since July. Policy makers also announced they would slow the pace of their effort to shrink the central bank’s large balance sheet.
In comments Tuesday, Fed Chair Jerome Powell said, "I expect that inflation will move back down ... on a monthly basis to levels that were more like the lower readings that we were having last year." Williams said unemployment would likely rise to 4% this year from the current 3.9%. Meanwhile, he said inflation by the Fed's preferred measure - the personal consumption expenditures price index - will likely be in the low 2% range by year end, putting it at around 2.5% for the year. He expects it to hit around 2% next year and remain there sustainably after that.
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