By Michael S. Derby
July 7 (Reuters) – Federal Reserve Bank of New York President John Williams said in a television interview on Tuesday he has grown a little less worried about the state of price pressures in the economy.
“Inflation is still too high,” Williams said in an interview on Fox Business’ Mornings with Maria program. But, “I do feel a little bit more positive about the near-term inflation outlook because of the energy price declines that we’re going to see.”
“We definitely have seen a big decline in oil prices, not only, you know, the current oil prices, but future expected oil prices,” Williams said, adding that he expects energy prices to “come down quite a bit and that will bring headline inflation down.”
Williams however stopped short of saying that has changed the monetary policy stance he’s held for some time now.
“Monetary policy is well positioned…to achieve our maximum employment and price stability goals,” Williams said, refraining from providing any guidance on whether the central bank’s next rate move is up or down.
The Fed met last month in a policy gathering that left its overnight target rate range unchanged at between 3.5% and 3.75%. New Fed Chairman Kevin Warsh has steadfastly refused to provide any guidance about what’s next for interest rate policy and has even held back on explaining how he thinks monetary policy should react to incoming data, believing markets should set their own path.
A number of Fed officials have been eying the possibility of a rate hike given the persistence of inflation above the 2% target. Some pressure to increase rates, however, has faded on the uneasy ceasefire that has followed the hot phase of the U.S.-Israeli war on Iran. That conflict roiled global energy prices and supply chains, but some of that pressure has been easing as the U.S. and Iran try to negotiate a settlement.
When thinking about what’s next for the Fed, Williams said “it really depends on what happens with the data” and the risks to the outlook. “Right now, I think policy is in a good place. We’ve just got to see how the economy evolves over coming months.”
Williams said in the interview the economy continues to grow solidly and that risks around the job market have stabilized.
The New York Fed leader also said he did not plan to change his communications style under Warsh.
“I regularly give my views on the economic data, the outlook, and how I see monetary policy, not so much forward guidance” but how interest rate policy is positioned relative to the Fed’s goals. “I plan to continue to do that,” Williams said.
(Reporting by Michael S. Derby; Editing by Andrew Heavens and Andrea Ricci)
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