Williams Fed did not see the towering needs to change monetary policy – fox business
Federal President of the Bank of New York Reserve John Williams said on Thursday that he did not see the needs that would soon occur in changes in the central bank interest rate policy because Trump’s administrative tariffs tend to increase inflation, weaken growth and encourage unemployment.
“I think the monetary policy is well positioned,” Williams said in an interview on Fox Business television channels. “I don’t see there is a need to change the Fed Fund tariff settings in the near future.”
Williams, who also served as Deputy Chairperson of the Federal Open Market Committee who set the tariff, noted that in his interview there was a significant uncertainty around the view. He reiterated his view that growth was likely to slide below 1% this year amid an increase in unemployment from 4.2% currently between 4.5% and 5%, because President Donald Trump’s import tax surge was encouraged price pressure at least for now.
“That is not a recession, it is just a slower view, slower growth than you see in recent years,” Williams said.
Fed officials did not say how much he hoped for Trump’s import tax increase to raise inflation but said “We will definitely get an effect on the price and inflation this year from the tariff.”
Williams said it was very important for Fed to ensure that the increase in inflation was not proven to last long.
“We need to ensure that the changes once in prices do not pass higher inflation,” he said, adding “we need to get inflation back to 2%… and do it on an ongoing basis.” He added that maintaining inflation expectations remains important.
Williams interview came a day after Fed Jerome Powell’s chairman spoke, with the leader of the central bank also warned of higher price pressure due to tariffs. Powell said that now is the time for the central bank to watch the economy for new data before changing interest rates.
The comments were getting a new reprimand from the President, who wanted Fed to cut interest rates even though inflation was above the target. The President also seems to threaten Powell’s work, saying the termination “could not come quite fast.”
If Trump tries to fire Powell, it is still unclear, the law will support such steps and will almost certainly trigger the main market crisis in the midst of unfortunate financial conditions. The term Powell is currently the chairman of Fed extending to next year.
Source: Reuters
