①John Williams, the president of the Federal Reserve Bank of San Francisco, stated that the latest inflation data shows that monetary policy is playing a role, but it is still too early to determine when it is appropriate to cut interest rates. ②Looking ahead to future monetary policy trends, Williams pointed out that the Fed will continue to make decisions based on economic data. If the rate of inflation slows down more slowly than expected, decision-makers will have to maintain high interest rates for a longer period of time.
June 29th Finance Network News (Editor Xia Junxiong): John Williams, president of the Federal Reserve Bank of San Francisco, stated on Friday local time (June 28th) that the latest inflation data shows that monetary policy is playing a role, but it is still too early to determine when it is appropriate to cut interest rates.
Williams was referring to the Personal Consumption Expenditures (PCE) Price Index. Core PCE is the inflation indicator preferred by the Federal Reserve, and the so-called 2% long-term inflation rate target for decision-makers is based on core PCE data.
Data released by the US Bureau of Economic Analysis on Friday showed that the US May PCE price index remained flat month-on-month, with a year-on-year increase of 2.6%, both in line with market expectations; After excluding factors such as food and energy with large fluctuations, the US May core PCE price index increased by 0.1% month-on-month and 2.6% year-on-year, both of which are in line with market expectations.
Williams stated in an interview with the media, "It's hard to imagine that monetary policy is not working anywhere. Our economic growth is slowing, spending is slowing, the labor market is slowing, and inflation is falling. This is the role of monetary policy."
Looking ahead to future monetary policy trends, Williams pointed out that the Fed will continue to make decisions based on economic data. If the rate of inflation slows down more slowly than expected, decision-makers will have to maintain high interest rates for a longer period of time.
Since July of last year, the Fed has been on hold, maintaining the Federal Funds rate target range at 5.25% to 5.50%, the highest level in over 20 years.
Williams said, "On the other hand, if the inflation rate falls at the same speed as it did at the end of last year, and the labor market remains unchanged or experiences a decline, we can adjust policy to deal with this situation." She added that it is still too early to draw conclusions.
Williams has the right to vote on monetary policy this year. She warned on Monday that the US labor market is approaching a turning point, and further slowdown could mean an increase in the unemployment rate, as companies not only need to adjust job vacancies, but also need to reduce actual positions.
Editor/Somer