Author：Currency Explorer
New York Fed President Williams said that while he expects high energy costs triggered by the war with Iran to push up overall inflation, his overall outlook for potential price pressures in the United States remains largely unchanged.
“The overall picture regarding underlying inflation hasn’t changed much,” Williams said bluntly in an interview on Tuesday. He added,He expects core inflation, excluding food and energy components, to rise only slightly by 0.1 to 0.2 percentage points.
Williams revealed,He has slightly lowered his 2026 US economic growth forecast to the range of 2% to 2.5%.Just before the war broke out, his forecast was between 2.5% and 2.75%. He also foresaw that overall inflation would rise.
Williams emphasized,There is currently no need to consider any adjustments to the Federal Reserve's benchmark interest rate.
He stated, "Current monetary policy is in an excellent position," allowing for a wait-and-see approach to assess the economic impact of the Middle East conflict. "Monetary policy is where it should be, and we are ready to react at any time should the situation change."
The war with Iran is putting the Federal Reserve's dual mandate to an extreme test, with soaring energy prices threatening to drag down economic growth and fuel inflation. The conflict and its blockade of global oil supplies show no signs of abating as the Trump administration threatens to take drastic action against Iranian civilian infrastructure starting Tuesday.
Several Federal Reserve officials, including Chairman Jerome Powell, have stated that current interest rates are just right and sufficient to balance the rising risks at present.
After a surprisingly strong jobs report in March pulled the unemployment rate down to 4.3%,Williams expressed greater confidence in the U.S. labor market.
“We see a much stronger labor market now, and it’s definitely not a market that’s heading towards weakness,” Williams said.
FOMC leadership battle
When asked who would head the Federal Open Market Committee (FOMC), the Fed's interest rate-setting body, in the coming months, Williams stated unequivocally that...Federal Reserve Chairman Jerome Powell will continue to head the committee until the Senate formally confirms a new Fed chairman. This means Powell is likely to continue to wield significant influence over monetary policy for the next few months.
Trump has nominated former Federal Reserve Governor Warsh to succeed Powell (whose term as chairman expires on May 15). However, a key Republican senator has vowed to block Warsh's confirmation unless the Justice Department drops its investigation into the Fed. Meanwhile, Justice Department prosecutors show no sign of backing down.
Powell's potential term as a Federal Reserve governor runs until 2028, and he has pledged to remain at the Fed until the investigation is resolved "in a transparent and final manner." He also stated that if Warsh's nomination is not approved by May 15, he expects to serve as interim chairman during the transition period.
