NEW YORK--New York Federal Reserve President John Williams said oil prices should eventually retreat and that inflation poses the larger risk to the Fed's dual mandate.
Speaking at an event at the New York Fed on Thursday, Williams said inflation remains "far too high" and that the labor market appears stable.
Earlier this week, rising oil prices reignited inflation fears after President Trump said the ceasefire with Iran was over. Prices have since leveled off following Trump's statement Wednesday that Iran contacted him seeking a deal.
Regarding the Fed's inflation outlook, Williams said certain parts may be more benign, such as tariffs and depending how events unfold, higher energy prices. However, Williams noted if inflation ends up being more persistent and meaningfully higher than his baseline forecast, policy would have to respond.
If the artificial-intelligence demand boom continues to outpace supply, that could be another factor for inflation, Williams said. Still, he expects increases in productivity tied to the technology.
Regarding Fed Chairman Kevin Warsh's new proposal for a set of task forces to evaluate core functions at the central bank, Williams said he looks forward to seeing how the process progresses, calling it a unique and timely opportunity.
During a speech in June, Williams said interest rates were well positioned in a range of 3.5% to 3.75% to bring inflation back down to 2%, with overall inflation expected to decline to 3.5% by year-end, and then to "continue on a glide path toward our 2% goal in 2027 and land on target in 2028."
Williams said the 2% target rate remains the goal for the Fed, adding that he will remain data-dependent. More information on inflation will be released next week from the Labor Department.
Write to Jessica Coacci at jessica.coacci@wsj.com
(END) Dow Jones Newswires
July 09, 2026 11:40 ET (15:40 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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