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.

.

Write to Michael S. Derby at michael.derby@wsj.com

 

(END) Dow Jones Newswires

May 22, 2019 12:49 ET (16:49 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.