Fed’s Williams Sees Inflation Returning to 2% Only in 2028

Federal Reserve Bank of New York President John Williams reinforced the case for a prolonged period of restrictive monetary policy, warning that inflation remains too high and is now likely to take longer than previously expected to return to target. Speaking on Thursday, Williams said, “Inflation is still too high,” while stressing that “it is imperative that we restore inflation to 2% on a sustained basis.” He now expects inflation to return to the Fed’s target only in 2028, a year later than his previous projection.

Despite the delayed inflation outlook, Williams stopped short of advocating additional near-term tightening. Instead, he argued that “monetary policy is well positioned to lower price pressures,” suggesting the current policy stance remains sufficiently restrictive. He expects inflation to moderate over the coming quarters as tariff-related price increases fade, housing inflation cools, and geopolitical pressures linked to the Middle East continue to ease.

Williams also maintained a constructive view of the broader economy, saying growth should remain positive despite elevated uncertainty. A resilient labor market, together with gradually easing inflation, should allow the current policy stance to continue working through the economy. His remarks reinforce the Fed’s higher-for-longer message, indicating policymakers remain committed to restoring price stability even if the journey back to 2% takes considerably longer than previously anticipated.