TSX runs higher on rate cut expectations
Investing.com -- New York Fed President John Williams said Tuesday that maintaining a modestly restrictive monetary policy stance is "entirely appropriate" given current economic conditions.
Speaking at the NY CREATES Albany NanoTech Complex in Albany, New York, Williams emphasized that keeping the federal funds rate at its current level of 4.25% to 4.5% allows time for policymakers to analyze incoming data and evaluate risks.
Williams’ position contrasts with some other Fed governors who have suggested a potential rate cut in July might be appropriate. However, his comments align with Fed Chairman Jerome Powell, who on Tuesday signaled patience on rate cuts amid economic stability.
"Given the continued uncertainty, the solid labor market, and inflation still above our 2 percent goal, the FOMC decided at its meeting last week to leave the target range for the federal funds rate unchanged," Williams said in his speech.
He noted that the Fed continues to reduce its holdings of Treasury securities and agency debt and mortgage-backed securities, adding that "despite market volatility related to trade policy and other developments, that process continues to go very smoothly."
Williams pointed to mixed economic signals, with survey data showing pessimism and uncertainty about the economic outlook, while hard economic data indicates the U.S. economy "remains in a good place."
In his outlook, Williams expects real GDP growth to slow to just over 1% this year, with unemployment rising to around 4.5% by year-end. He projects inflation will increase to around 3% in 2025 due to tariffs, before gradually declining to 2% over the following two years.
The New York Fed president also highlighted findings from a recent survey showing that about three-quarters of manufacturers and service firms in New York and New Jersey have passed along at least some tariff-related cost increases to customers.