Fed's Williams: Doesn't See Strong Argument to Raise or Lower Rates--Update
22 May 2019 - 06:04PM
Dow Jones News
By Michael S. Derby
NEW YORK -- Federal Reserve Bank of New York President John
Williams said that while inflation remains lower than he'd like, he
doesn't see much chance the central bank will lower rates any time
soon to bolster price pressures.
"I don't see any strong argument...to move interest rates one
way or the other" and the current setting of monetary policy is
"well positioned" for what's going in on the economy, Mr. Williams
told reporters on Wednesday in a briefing on housing issues held at
the New York Fed.
Mr. Williams said he expects the economy to grow just over 2%
this year and he sees the 3.6% jobless rate going even lower as the
year moves forward. He said worries and risks surrounding the
economy have abated a bit since the start of the year.
Mr. Williams also said there is little upward pressure on
inflation, although he added underlying inflation pressures are
likely close to the Fed's 2% target. The official said he would
like to see inflation move higher and will be closely watching the
data to see that recent softness in price pressures is temporary,
as he believes it is likely to be.
But Mr. Williams, who also serves as vice chairman of the
rate-setting Federal Open Market Committee, said he recognizes that
inflation is not where the Fed wants it to be, and that could have
implications for monetary policy.
"I'm committed that we see a sustained achievement of our 2%
inflation goal. I'm fully aware we are running under our 2%
inflation goal for a number of years," Mr. Williams said. "We need
to make sure we continue with a strong expansion, the strong
economy, in a way that leads to inflation back to our symmetric 2%
goal," he said.
Mr. Williams said he still expects the Fed will get where it
wants to go. "My baseline view is that the tick down in inflation
will be reversed in part over the rest of this year and inflation
will be moving back to 2% over the next year or two," he said.
Mr. Williams says he doesn't see the need for any special
monetary-policy action right now to help move inflation back up to
desired levels.
If low inflation "requires an adjustment in monetary policy down
the road at some point, then based on all of that analysis and
evaluation, then that's appropriate and we should do that. I don't
think we're at that point today and I don't think we'll be at that
point in the very near future."
Mr. Williams' comments come on the heels of a speech earlier
Wednesday by St. Louis Fed leader James Bullard, a fellow FOMC
voter. He said the Fed may well need to lower rates to move
inflation higher.
"A downward policy-rate adjustment even with relatively good
real economic performance may help maintain the credibility of the
[Federal Open Market Committee's] inflation target going forward,"
Mr. Bullard said. "A policy rate move of this sort may become a
more attractive option if inflation data continue to
disappoint."
The two Fed officials spoke ahead of the release of meeting
minutes from the central bank's most recent FOMC meeting. Officials
kept rates steady then and sent no signals they have any appetite
to change the stance of monetary policy as the year moves forward.
Financial markets increasingly reckon the Fed will lower rates
before the end of year -- according to fed-funds futures that track
interest-rate expectations -- in large part to combat weak
inflation.
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Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
May 22, 2019 12:49 ET (16:49 GMT)
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