Fed’s Williams: Neutral rate is still likely low

New York Fed president John Williams told Fox Business on Thursday that monetary policy is “well positioned” and doesn’t need any tweaks right now. He warned that Trump’s tariffs are likely to stoke inflation, drag on growth and lift unemployment, but sees no need to move the fed funds rate anytime soon.

Key Quotes

• The economy is in a very good place amid uncertainty.
• Monetary policy is well positioned, doesn’t see need to change rates any time soon.
• Monetary policy is in the right place.
• Tariffs will drive up inflation this year and lower growth.
• Time to collect data and understand what’s going on.
• It’s really hard to say what Fed will do with rate policy.
• Inflation expectations are important to watch right now.
• Market pricing reflects uncertainty about outlook.
• My basic views on monetary policy haven’t fundamentally changed.
• Recent inflation has been good news but still above target.
• Key is to watch how trade policies affect inflation.
• Tariffs will definitely impact inflation this year, unclear how long it persists.
• Fed needs to make sure one time change in prices doesn’t affect longer run.
• It’s essential to keep inflation expectations anchored.
• Won’t make a prediction about recessions.
• Growth this year likely significantly slower, unemployment up.
• GDP likely under 1% this year, jobless rate up to 4.5%–5%.
• Neutral rate is still likely low.
• Longer run federal funds rate likely around 3%.