Federal Reserve Governor John Williams stated that the current monetary policy stance is in a favorable position to balance the opposing risks facing the Fed's dual mandate. He also noted that the conflict in the Middle East has intensified these risks.
Williams said, "At present, the future is difficult to see, and the risks to both sides of our dual mandate have increased."
Speaking in Midtown Manhattan on Monday, Williams indicated that due to tariffs and rising energy prices, he expects inflation to remain above the Fed's 2% target in the coming quarters.
Furthermore, he stated that the war involving Iran has caused supply chain disruptions, which he compared to other supply disruptions the global economy experienced in 2021 as it emerged from the pandemic.
Williams added that, meanwhile, the labor market is showing conflicting signals. He pointed out that overall government data suggests stabilization, while anecdotal indicators point to a continued gradual slowdown.
He said, "The scale and duration of the impact from supply disruptions and rising energy prices caused by the Middle East conflict are key factors determining the global economic outlook. We simply cannot know how events will unfold."
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