Fed's Williams (voter) Q&A: Seeing markets respond to Middle East changes; CPI print was consistent with what he is hoping to see over the coming months; CPI was a "little piece" of inflation run rate returning toward goal

Inflation

• Risks to energy price inflation are somewhat less.
• 'Absolutely' not any consideration to changing 2% target; it is the right number and don't want to move the goalposts.

Rates/Policy

• Don't have a clear direction about which way interest rates are going or when.
• Was very strong support for the move away from forward guidance.
• Mortgage rates are very tied to 10-year treasury yield, which is being lifted by expectations for strong US growth.
• When inflation comes back to 2%, would expect rates to move down somewhat to more normal levels.
• A lot of people are still sitting on low mortgage rates, will take a few years to resolve.
• Expects rates to eventually move down with inflation.

Balance Sheet

• Roughly in range of ample reserves; "now in steady as she goes mode".
• There are parts of the balance sheet moving ahead organically and we are just meeting that demand.

Economy

• Seeing an explosion of new businesses in the US.
• There is a lot of dynamism in US economy.
• Default rates have stabilised at pre-pandemic levels over the past year.
• Broader consumer credit is growing consistent with the economy.
• K-shaped economy is real.