The Federal Reserve officials echoed Chair Jerome Powell’s comments on Friday, downplaying the recent rise in long-term inflation expectations but emphasizing that the outlook is highly uncertain. The current stance of monetary policy is considered appropriate by Fed officials, who believe it positions the US central bank well to respond to changing conditions.
Federal Reserve officials, including Chicago Fed President Austan Goolsbee and New York Fed President John Williams, said the labor market and growth have been solid, and noted that any inflationary impact from tariffs has the potential to be short-lived. They also emphasized that long-term inflation expectations are crucial to keep stable.
A University of Michigan survey showed a rise in consumer expectations for inflation over the next five to 10 years, to 3.9%, the highest level in more than three decades. However, Fed officials largely dismissed this measure, citing other gauges of expected inflation that have remained steady.
Williams said there is uncertainty over how rapid changes to immigration, trade and fiscal policy will alter the economy. He noted that officials’ median forecasts showed slower growth and upward adjustments to inflation and unemployment forecasts seemed “reasonable.”
Fed officials also mentioned that the impact of limited tariffs could be transitory, a term used earlier this week by Chair Powell to describe the pandemic-era spike in inflation. They said one-time levies without retaliation from trade partners may allow the Fed to look through any impact on inflation.
The New York Fed chief said he expects growth to moderate this year due to reduced immigration and sees somewhat higher unemployment and inflation in 2025. Policymakers left borrowing costs unchanged earlier this week, with officials stating that monetary policy is well-positioned to wait for greater clarity on the effects of trade policies.
Source: https://finance.yahoo.com/news/fed-williams-says-modestly-restrictive-130500142.html