Fed's Williams (voter) says Middle East War is already lifting inflation, amid challenges, monetary policy is well positioned
Importance
Level 1
OUTLOOK
- Economic outlook highly uncertain amid war impact.
- Seeing emerging signs of supply chain disruptions.
- Sees 2026 growth of 2-2.5% (vs Fed median of 2.4%).
- Fed rate control system is working very well.
LABOUR MARKET:
- Expects unemployment to stay between 4.25-4.50% (vs Fed 2026 median projection of 4.4%).
- Labour market is sending mixed signals.
INFLATION:
- Expects inflation will return to target in 2027, after hitting 2.75-3.00% this year on energy prices (Fed median sees PCE at 2.7% in 2026; and Fed median sees inflation back at target in 2028).
- Some of the energy shock is now passing through into other prices.
- Swift end to conflict should help ease inflation pressures.
- Expects tariff impact on inflation to wane this year.