New York Fed President Says 'Room for Further Rate Adjustments in the Near Term' (Update)

(New York=Yonhap Infomax) Jin Woo Choi – John Williams, President of the Federal Reserve Bank of New York, said on the 25th (local time), "I still see the possibility of further adjustments to the target range for the federal funds rate (FFR) in the near term to move policy closer to a neutral stance."

Williams' remarks suggest the Federal Reserve (Fed) may consider additional rate cuts.

Speaking at the Central Bank of Chile's centennial conference in Santiago, Williams stated, "I view monetary policy as modestly restrictive, but following recent actions, it is now slightly less so than before."

He emphasized, "Looking ahead, it is essential to return inflation to our 2% long-term target on a sustained basis," adding, "At the same time, it is equally important to achieve this without creating excessive risks to our maximum employment objective."

Regarding the state of the U.S. economy, Williams noted, "Economic growth has slowed from last year's pace, and the labor market has gradually cooled." He continued, "Indicators of balance between labor demand and supply, including the unemployment rate, have gradually weakened over the past year, and the labor market has returned to pre-pandemic levels when it was not overheated."

He stressed, "I want to highlight that this has been a gradual process, sustained without signs of increased layoffs or a sharp deterioration in the labor market."

On inflation, Williams said, "The impact of trade policy and other developments has somewhat elevated U.S. inflation, offsetting the expected downward trajectory." He analyzed, "As a result, the latest data show inflation remaining around 2.75%, with progress toward our 2% target temporarily stalled."

Williams assessed, "Tariff increases may have raised current inflation by about 0.5 to 0.75 percentage points," adding, "We have not seen signs that tariffs are causing secondary effects or other spillovers."

He explained, "Inflation is very well anchored, supply chain bottlenecks are not widespread, the labor market is not generating inflationary pressures, and wage growth has moderated."

Williams projected, "I expect the inflationary impact of tariffs to be felt over the remainder of this year and into the first half of next year," and added, "After that, inflation should return to a path toward 2% by 2027."

jwchoi@yna.co.kr

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