Fed’s Williams says next move likely to lower rates, but timing uncertain

John Williams, president of the Federal Reserve Bank of New York, stated on Monday that the central bank’s next action is likely to be to lower interest rates, but he did n’t give a date for when that will take place.

” Finally we’ll have price breaks”, but monetary policy is in a “very good place” for the time being, Williams said in opinions before the Milken Institute 2024 Global Conference in Beverly Hills, California.

His remarks follow the Federal Open Market Committee ( FOMC), which determines monetary policy ,’s meeting last week. The benchmark federal funds rate was maintained by Fed officials at a range of 5. 25 % to 5. 05 %, and the Fed officials indicated that it will likely stay there for an undetermined amount of time while looking for additional proof that inflation is on the verge of falling to the 2 % target.

Given that the Fed’s preferred metric indicates that inflation is moving at a 2. 7 % rate, which is significantly above the target rate, Williams, who is a voting member of the FOMC, did n’t provide a timeline for a reduction from the highest level in 23 years. With food and energy excluded, underlying core inflation increased to 2. 8 %, which is even higher.

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Interest rates will likely be cut second, according to Federal Reserve Bank of New York President John Williams, though the schedule is still uncertain. ( Al Drago/Bloomberg via Getty Images / Getty Images )

He stated that, given the economy expanded more quickly last year, he anticipates that the U. S. gross domestic product ( GDP ) will increase by between 2 % and 2. 5 % this year.

Williams added that financial markets have n’t been hampered by the Fed’s efforts to reduce its balance sheet’s size.

According to the FOMC policymakers ‘ post-meeting statement from last week, they will have “greater trust” that inflation is soaring before easing monetary policy. It added,” In recent months, there has been a lack of further progress toward the agency’s 2 percent inflation objective”.

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According to Federal Reserve Chairman Jerome Powell, the subsequent loss in the fight against inflation is not the catalyst for an increase in interest rates. ( Alex Wong/Getty Images / Getty Images )

The Fed is unlikely to raise interest rates in response, according to Federal Reserve Chairman Jerome Powell, despite indications that inflation is n’t slowing down or that it may even be heating up.

” I think it’s unlikely that the next policy rate shift will be a hike”, Powell said after last week’s meeting. ” We do n’t see evidence that policy is n’t restrictive”.

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Megan Henney of FOX Business and Reuters were the authors of this statement.