With Powell's job on the line, Fed's Williams sees no need to cut rates

Investing.com -- Federal Reserve Bank of New York President John Williams expressed his view that the current interest rate policy is appropriate and does not require immediate adjustment.

Williams, who holds the position of vice-chairman of the Federal Open Market Committee, indicated during an interview on Fox Business Thursday that the central bank's monetary policy is "well positioned" despite the potential inflationary impact of the Trump administration's tariffs.

The comments from Williams come amid elevated tension on the Fed from President Donald Trump. Today, Trump called for Fed Chairman Jerome Powell's job for not cutting rates fast enough.

In a post on Truth Social, Trump said Powell "should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now." He added, "Powell’s termination cannot come fast enough!"

Powell's term as Fed Chairman ends in May 2026.

In his comments today, Williams highlighted the uncertainty surrounding economic forecasts. He anticipates that economic growth may decelerate to below 1% this year, with unemployment potentially increasing to a range of 4.5% to 5% as a result of the recent hike in import taxes. Williams described this scenario as a slowdown rather than a recession, noting a less robust growth compared to the past few years.

The Fed official did not provide specific projections on how much the tariffs would contribute to inflation but acknowledged that price increases are expected. He emphasized the importance of ensuring that any rise in inflation stemming from tariffs does not become persistent, stressing the goal of maintaining inflation around the 2% target on a sustained basis. Williams also mentioned the significance of keeping inflation expectations under control.

The remarks from Williams followed a speech by Fed Chair Jerome Powell, who also warned of potential inflationary pressures due to tariffs and advocated for a cautious approach to adjusting rates pending new economic data.