Financial News Agency, April 12 (Editor Zhao Hao)
On Thursday (April 11) local time, New York Fed President John Williams highlighted the progress made by the Federal Reserve in balancing inflation and employment goals but emphasized that the task is not yet complete.
In a speech at the Federal Home Loan Bank members seminar, Williams, who also serves as vice chairman of the Federal Open Market Committee (FOMC), acknowledged the strides made toward a 2 percent inflation target but stated that the dual mandate of the Fed has not been fully achieved.
“With the economy moving closer to our goals, it is important to continue working towards achieving our dual mandate of stable prices and maximum employment,” Williams said.
Williams’ comments come in light of the latest U.S. Consumer Price Index (CPI) data released on Wednesday, which showed a 0.4% increase in month-on-month inflation and a 3.5% rise compared to the previous year. Core CPI, which excludes volatile food and energy prices, also saw an increase of 0.4% month-on-month and 3.8% year-on-year.
These figures exceeded market expectations and underscored the challenge faced by the Fed in managing inflationary pressures. The overall inflation rate of 3.5% is the highest level since September last year, indicating a sustained upward trend in inflation.
Despite the uptick in inflation, Williams expressed confidence in the Fed’s ability to gradually bring inflation back to the 2% target, although he acknowledged that there may be temporary fluctuations along the way.
Looking ahead, Williams highlighted the need for the Fed to closely monitor economic data and reiterated that there was no immediate need to adjust monetary policy. While some market participants have scaled back expectations for interest rate cuts, Williams emphasized the importance of data-driven decision-making in assessing the need for policy adjustments.
On the labor market front, Williams noted positive signs of “normalization” and predicted a peak U.S. unemployment rate of 4% this year, followed by a gradual decline. He also hinted at the possibility of gradual easing of monetary policy restrictions if the economic outlook aligns with the FOMC’s forecasts.
In summary, Williams’ remarks underscore the Fed’s ongoing efforts to strike a balance between inflation and employment goals, amidst evolving economic conditions and data uncertainties. The central bank remains vigilant in its approach to monetary policy, aiming to support sustained economic growth while managing inflationary pressures.