New York Fed President John Williams said the current interest rates in US are in the right place with “essentially nonexistent” inflation pressures. Additionally, some downside risks to global growth have receded. US economy is also strong and is on track to growth above potential at above 2% this year.
The downtick of inflation is expected to reverse this year even though there is a risk that inflation gets stuck. However, Williams noted that Fed is not at a point to respond to low inflation by changing monetary policy yet. And he doesn’t expect that to be the case in the near term neither.
Separately, Boston Fed President Eric Rosengren said Fed currently assumes the US and China to eventually reach a trade agreement. However, if trade war drags on, uncertainty will weigh on the economy. He reiterated that tariffs are one of the biggest risks to the US economy.