Williams: The Fed's monetary policy is currently in the right place.

New York Fed President John Williams stated that given the uncertain outlook, the Fed's monetary policy is currently in the right place. He noted, “There is a certain level of uncertainty in monetary policy,” and emphasized that the current moderately restrictive stance is entirely appropriate in light of a solid labor market and inflation remaining slightly above the 2% target. Williams expressed that the current monetary policy setting keeps the Fed ready to adapt to changing conditions that could impact the achievement of its dual goals.

Looking ahead, Williams remarked on the economic slowdown partially due to declining immigration rates, while acknowledging the difficulty in predicting how the economy will evolve. He pointed out that uncertainty is high, with numerous scenarios emerging based on financial, trade policies, and geopolitical developments. Additionally, he highlighted a notable rise in short-term inflation expectations, indicating a potential shift in public sentiment due to aggressive federal government spending cuts under the Trump administration.