New York Fed President John Williams emphasized the need to utilize monetary policy tools to achieve price stability during a speech at the Money Marketeers of New York University. He expressed confidence in attaining a sufficiently restrictive stance to bring inflation down to Fed’s 2% longer-run goal

Williams noted that “the most recent data indicate that this trend of slowing inflation is continuing.” He expects PCE core inflation to ease to 3.25% this year and reaching the 2% target within the next two years. He also commented on the labor market, calling it “very tight” but showing some signs of cooling. Williams expects the unemployment rate to rise to between 4% and 4.5% over the next year, with growth moderating this year before rebounding next year.

Additionally, Williams addressed the recent major bank collapse in the US, stating that the banking system remains sound and resilient. However, he anticipates that the collapse will result in tighter credit conditions for households and businesses, which could impact spending. Williams highlighted the importance of closely monitoring credit conditions and their potential effects on the economy.

Chicago Fed President Austan Goolsbee discussed the upcoming May FOMC meeting, the strength of the job market, and persistent inflation in an interview. Goolsbee cautioned against reading too much into his stance on interest rates, stating, “We still got a couple of weeks before the actual meeting, so if anybody imputed some specific basis points of what I was for, that’d be inaccurate.”

Goolsbee acknowledged the strong job market as the most robust part of the economy, with “unprecedented numbers,” while noting that inflation remains a concern. He said, “Inflation — there’s been some improvement, but in a way that’s the worst part of the economy,” adding that it has been “more persistent than we wanted.”

As for the potential impact of the recent failure of two US banks on the economy, Goolsbee said it is essential to monitor the extent of the slowdown. He explained, “How much squeezing is going to be coming from the bank side I think is going to matter for whether this economy is going to slow down.” Goolsbee emphasized that the intensity of the anticipated growth slowdown in the second half of the year would depend significantly on the financial sector.

In a Reuters interview, St. Louis Fed President James Bullard expressed his views on interest rates, inflation, and the possibility of a recession.

Contrary to some of his FOMC colleagues who foresee interest rates peaking at 5.00-5.25%, Bullard believes the policy rate may need to rise between 5.50% and 5.75% to effectively combat inflation.

Bullard emphasized that once rates reach a “sufficiently restrictive” level, the bias should be to maintain them “higher for longer” to ensure inflation is fully under control.

He also stressed the importance of being responsive to incoming data in the coming months, rather than committing to a fixed path for interest rates. “You wouldn’t want to be caught giving forward guidance that said we’re definitely not doing anything and then have inflation coming in too hot or too sticky,” he said.

As for the possibility of a recession, Bullard dismissed the idea, citing a strong labor market as a key indicator. He explained, “the labor market just seems very, very strong. And the conventional wisdom is that if you have a strong labor market, that feeds into strong consumption… and that’s a big chunk of the economy.”

He added, “it doesn’t seem like the moment to be predicting that you have a recession in the second half of 2023.”