Fed's Williams (voter) says monetary policy remains well positioned for uncertain economy

Fed's Williams is asserting a cautious but resilient outlook on monetary policy in light of ongoing uncertainties, particularly regarding geopolitical events.

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Fed's Williams (voter) says monetary policy remains well positioned for uncertain economy

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  • No way to know yet how Iran war impact will play out for US economy.
  • Risks to both sides of Fed's mandates have increased.
  • Economy is presenting 'unusual set of circumstances'.
  • Market energy outlook benign, but there are 'plausible' bad scenarios.
  • Inflation likely to be 3% this year, back to 2% target in 2027.
  • 'Notable' supply chain disruptions emerging.
  • Tariffs and energy are big inflation drivers, underlying inflation mostly stable.
  • It's good that inflation expectations remain contained.
  • Expects US economic growth between 2-2.25% this year.
  • Economy has been very resilient.
  • Expects jobless rate to stay around 4.25-4.50%.
Context

His commentary suggests that while inflation is expected to moderate to the Fed's target by 2027, the economy faces notable risks, including potential supply chain disruptions and tariff impacts. This indicates a careful balancing act in future policy decisions, particularly as inflation expectations remain contained amidst underlying pressures.

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