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Investing.com-- New York Federal Reserve President John Williams said on Wednesday that it was too soon to consider lowering interest rates, citing growing inflationary pressure from tariffs and persistent uncertainty in the economic outlook.
Speaking at the New York Association for Business Economics, Williams pointed to early signs that tariffs are pushing up prices in categories heavily exposed to import duties, such as appliances and luggage.
“Price increases so far this year have been well above what one would expect based on past trends,” he said, adding that tariff-related effects are likely to intensify over the coming months.
"All in all, although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months," Williams said, according to a published text of his speech.
"Overall, I expect tariffs to boost inflation by about 1 percentage point over the second half of this year and the first part of next year," he added.
He also noted that a weaker dollar is likely to add further upward pressure on prices.
With core inflation still hovering around 2.75% and GDP growth projected to slow to about 1% this year, Williams said the Fed’s current policy stance of holding rates between 4.25% and 4.50% remains "entirely appropriate".
Despite a solid labor market, Williams forecast U.S. GDP growth to slow to 1% in 2025, with unemployment likely to rise to around 4.5%.