Williams From the Fed: Current Rates Are Right – Economy Headed Toward Stability and Full Employment

John Williams, President of the Federal Reserve Bank of New York, expressed strong confidence that the current U.S. interest rates are well-calibrated for today’s economic conditions. He believes they will support sustainable growth, job creation, and help the central bank reach its 2% inflation target. “Our monetary policy is in a strong position,” Williams stated during his speech at the Council on Foreign Relations in New York. He added that the Fed now has better control over the risks threatening its dual mandate of full employment and price stability.

After Rate Cuts, the Fed Plans a Cautious Approach His comments came shortly after the FOMC (Federal Open Market Committee) decided to cut rates by 75 basis points in 2025. Williams is among those advocating a cautious strategy, suggesting the Fed should wait for more data before making further moves. According to him, it’s essential to monitor the labor market, which he said is returning to pre-pandemic levels:

“The recovery is gradual – without signs of mass layoffs or sudden economic downturns,” he assured. He also added that unemployment will likely remain stable this year and gradually decline over the next few years.

Trump’s Tariffs Seen as Temporary Inflation Spike Williams also commented on the tariffs imposed by the Trump administration, calling them a one-time price shock. He expects inflation to peak between 2.75% and 3% in the first half of the year, but then drop to 2.5% by year-end, with the economy maintaining above-average growth.

A Divided Fed: Not Everyone Supports Rate Cuts The Fed’s December meeting minutes revealed a split among committee members. Some favored a 25-basis-point rate cut, while others preferred keeping rates unchanged. The minutes, released on December 30 in Washington, highlighted internal hesitation:

“Some participants who supported a rate cut said the decision was very close, or that they could have supported holding rates steady,” the document said.

Odds of a January Rate Cut Are Falling Following the release of the minutes, the odds of a rate cut in January fell to just 15%. Stephen Stanley, chief U.S. economist at Santander US Capital Markets, noted:

“The near-even split in the vote underscores Jerome Powell’s continuing influence as Fed Chair.” The Fed now finds itself at a delicate crossroads—seeking the right balance between supporting growth and controlling persistent inflation.

#Fed , #JeromePowell , #interestrates , #fomc , #TrumpTariffs

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