New York Fed President John Williams said overnight that the “most likely case” was for US economy to grow 2%, with low unemployment. To him, the probability of recession this year or next was “not elevated relative to any year”. He also downplayed the significance of yield curve inversion. He added “there’s a lot of reasons to think that it has been a recession predictor for reasons in the past that kind of don’t apply today.” And, it only “telling us that growth will be pretty modest”.
On monetary policy, Williams said short-term interest rate is “around neutral”. Meanwhile, “any development in the economy, whether it’s on the employment side or on the inflation side, that moved in a persistent way away from our objectives, one way or the other, would be a reason to rethink the path of policy going forward.”
