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.