New York Federal Reserve President John Williams stated that he expects declining energy prices to contribute to a reduction in overall inflation in the coming months, while reiterating that the central bank's policy stance is currently well-positioned.
“I am actually somewhat more optimistic about the near-term inflation outlook because we are going to see energy prices come down,” Williams said in an interview with Fox Business on Tuesday. “I think monetary policy is in a good place” to achieve the Federal Reserve’s mission, he added.
The Strait of Hormuz, which had largely been shut down following the outbreak of the US-Iran war, has shown signs of reopening. Oil prices have declined significantly since the US and Iran reached an interim peace agreement.
However, prior to the drop in oil prices, the Federal Reserve's preferred inflation gauge—the personal consumption expenditures (PCE) price index—rose 4.1% year-over-year in May, while the core PCE price index, which excludes food and energy, increased by 3.4%.
Williams also noted that the labor market is stabilizing and economic growth remains solid.
The New York Fed president indicated that Federal Open Market Committee (FOMC) members reached a "strong consensus" to remove guidance on the future path of interest rates from the policy statement issued after their June meeting.
“Given the uncertainty about the inflation and economic outlook, it’s no longer appropriate to try to provide clear forward guidance on where interest rates are going,” he said. “The uncertainty is too great.”
Comments