New York Fed President John Williams signaled that the Fed could remain in a wait-and-see stance, even as higher energy prices from the Iran conflict are expected to push headline inflation higher. Speaking to Bloomberg TV, Williams said “the story hasn’t changed very much,” emphasizing that underlying inflation dynamics remain broadly stable despite the oil-driven headline surge.
Williams acknowledged that rising energy costs will lift headline inflation, but stressed the distinction between headline vs underlying inflation, suggesting policymakers are not yet concerned about second-round effects. He also downgraded his 2026 growth outlook modestly to 2.0–2.5% from 2.5–2.75%, while maintaining confidence in a stable labor market. “We’ve seen the labor market much more stable now,” he said, adding it is “definitely not… weakening.”
On policy, Williams made clear there is no urgency to adjust rates, stating that “monetary policy is exactly where it needs to be.” The Fed, in his view, is well positioned to monitor how the oil shock feeds through to the economy before responding.
