Fed's New York chief says policy ready, inflation to ease

Federal Reserve Bank of New York President John Williams expressed confidence that current monetary policy is well positioned to guide inflation back to the central bank's 2% target, while also signaling a readiness to raise interest rates if price pressures do not ease as expected. In an interview published on August 3, Williams forecast that inflation will decline in the second half of 2026 and continue to fall into 2027, setting the stage for a sustained return to the 2% goal by 2028.

Williams stated that his personal forecast is for inflation to come down in the second half of this year and decline further next year. He said monetary policy is currently well positioned to support that disinflationary path. However, he emphasized that if the economy is not on a trajectory to bring inflation back to 2%, it would be absolutely appropriate for the Fed to act.

The comments follow last week's meeting of the Federal Open Market Committee, which left the benchmark federal funds rate unchanged in a target range of 3.50% to 3.75%. Williams said he strongly supported the committee's decision to hold rates steady. The decision was not unanimous, however, as three officials dissented in...