Federal Reserve President Comments on Interest Rates

By Michael S. Derby

NEW YORK (Reuters) – Federal Reserve Bank of New York President John Williams stated Thursday that he sees no immediate need for changes in the central bank’s interest rate policy. He suggested that tariffs from the Trump administration are likely to increase inflation, weaken growth, and raise unemployment levels.

In an interview with Edward Lawrence on Fox Business, Williams stated, “I think monetary policy is well positioned. I don’t see any need to change the setting of the fed funds rate anytime soon.”

Williams, who also serves as vice chairman of the Federal Open Market Committee, emphasized the uncertainty surrounding economic forecasts. He expects growth to slide below 1% this year and predicts the unemployment rate could rise from the current 4.2% to between 4.5% and 5% due to the pressures from President Trump’s import taxes.

According to Williams, “That’s not a recession; that’s just a slower outlook, slower growth than you’ve seen in the past couple years.” While he didn’t specify the impact of the tariffs on inflation, he mentioned that higher prices from tariffs will be evident this year.

Williams stressed the importance for the Fed to ensure that these inflation increases do not become permanent. He remarked, “We need to make sure that any one-time changes in prices don’t pass through into more persistent higher inflation,” advocating for maintaining inflation at the 2% target.

His comments followed those made by Fed Chair Jerome Powell, who also cautioned about rising price pressures from tariffs. Powell indicated that the focus should be on gathering more economic data before altering rates.

These remarks have drawn criticism from President Trump, who has expressed a desire for the Fed to lower rates despite inflation levels being above targets. Trump hinted at potential repercussions for Powell’s leadership, saying that termination “cannot come fast enough.”

Although speculation exists regarding Trump potentially firing Powell, it is uncertain how legal grounds would support such an action, and it could trigger significant market turbulence given the current financial instability. Powell’s term as Fed Chair extends into next year.