US New York Federal Reserve Chairman Williams recently stated that the current monetary policy is in a good state, and monetary policy is restrictive. If inflation continues to fall gradually, the Federal Reserve may start cutting interest rates this year.
US New York Federal Reserve Chairman Williams, known as the “top three in the Federal Reserve,” said on Monday that he does not think the recent US inflation data is a turning point. Although he admits that these data will influence his views and forecasts, the latest CPI is important information affecting predictions.
Similar to last week's opinion, Williams reiterated that the current monetary policy is in a good state, and that monetary policy is restrictive. If inflation continues to gradually fall, the Federal Reserve may start cutting interest rates this year. “We need to start a process at some point to bring interest rates back to a more normal level. I personally think this process might start this year”.
In terms of reducing the balance sheet, Williams said that it is a prudent course of action for Federal Reserve officials to seek to slow downsizing. Doing so will enable the Federal Reserve to evaluate and analyze. The current level of reserves is generally sufficient.
Monday's data showed that the Federal Reserve's overnight reverse repurchase agreement (RRP) usage plummeted to US$327.066 billion, at least the first time since May 2021 that RRP fell below the $400 billion mark. Along with the continued decline in RRP, this is thought to be the imminent downsizing of the Federal Reserve's slowdown.
Williams pointed out that the Federal Reserve policy has always been an important driving force for rebalancing.
Williams believes that the US economy will continue to grow at a steady pace, and consumer spending will be driven by strong fundamentals. He also mentioned that the Federal Reserve officials are watching the situation in the Middle East very closely, but he does not see this as a major factor affecting the prospects of the US economy.
Recently, several data released by the US showed a resurgence in inflation. These include last week's CPI and PPI inflation figures, as well as better-than-expected retail data for March, which was recently released this Monday. After these data were released, US debt fell sharply, and traders no longer thought that interest rates would be cut by 100% before November this year.
Editor/Somer