New York Federal Reserve Chairman John Williams is optimistic about the latest decline in inflation data, but he is not inclined to immediately push the Federal Reserve to lower interest rates because of this. In an interview, Williams pointed out that although the decline in the consumer price index in April was “a positive sign after a series of disappointing data,” he doesn't think there is a good reason to adjust monetary policy at the moment.
Williams believes that although inflationary pressure shows signs of slowing down, it is still necessary to observe whether this trend will continue before deciding whether to reduce borrowing costs. He stressed that there is currently no indication that monetary policy changes are needed immediately, and it is not expected that in the short term, there will be more confidence that inflation will move closer to the target.
He made it clear that there is currently no need to further tighten monetary policy by raising interest rates, which is inconsistent with market speculation that the Federal Reserve may need to raise interest rates further to control inflation. Williams' comments were published against the backdrop of a 3.4% year-on-year increase in the consumer price index (CPI) and a 3.6% year-on-year increase in the core CPI in April, the latter being the smallest increase in three years.
As one of the Federal Reserve's key decision makers, Williams' views have an important impact on market expectations. His remarks may influence investors' judgment on the future policy trends of the Federal Reserve. Although the inflation data from earlier this year exceeded expectations, causing the Fed's firm forecast of interest rate cuts to be shaken, Williams' remarks suggest that the Fed is unlikely to cut interest rates in the short term.
Furthermore, Williams also mentioned that although economic growth and employment data show signs of slowing down, the economic foundation is still stable and the labor market remains tense. He predicts that the unemployment rate may rise slightly, while the inflation rate may approach the Federal Reserve's 2% target by the end of the year and reach that level next year.
Williams stressed that when considering monetary policy adjustments, the Federal Reserve will base its confidence in maintaining the inflation rate at 2%, rather than waiting until the inflation rate actually reaches 2%. He also mentioned that although the size of the Federal Reserve's balance sheet has expanded due to previous bond purchases, its impact on bond yields is still moderate.
Federal Reserve Chairman Jerome Powell also expressed expectations that the inflation rate will fall back and hinted that policy interest rates will remain unchanged for the foreseeable future. These comments reflect the cautious optimism of Federal Reserve officials about the current state of the economy, as well as their cautious stance in formulating monetary policy.
The US dollar index currently rose slightly by 0.1% to 104.4010.