NY Fed's Williams: Policy Fits Mideast Uncertainty

New York Federal Reserve President John Williams stated on Monday that U.S. monetary policy is well positioned to manage heightened economic uncertainty stemming from the Middle East conflict, as he delivered remarks to the Cynosure Group in New York City.

Williams highlighted risks to both sides of the Federal Reserve's dual mandate of price stability and maximum employment. "The future is difficult to see, and the risks to both sides of our mandate have increased," he said. He identified the extent and duration of supply disruptions and higher energy prices from the conflict, including the closure of the Strait of Hormuz, as key factors shaping the global outlook. Current energy market pricing, he noted, reflects a benign view of oil prices, though several plausible scenarios could lead to more severe supply shocks with broader impacts on inflation and activity.

In his baseline forecast, Williams projected U.S. economic growth of 2 to 2.25 percent this year, with unemployment remaining stable between 4.25 and 4.50 percent. Inflation, pressured by tariffs and energy costs, is expected to hold around 3 percent this year before returning to the Fed's 2 percent target. Long-term...