For a long time, many economists have believed that the Fed's response to the soaring inflation during the COVID-19 pandemic was too slow. In a recent speech, New York Fed President Williams defended this by saying that policy makers were working in an atmosphere of great uncertainty and were very effective in dealing with the extreme downside threats to the economy and financial markets.

After the Biden administration came to power, it launched a $1.9 trillion economic stimulus plan, which boosted the recovery rate of the US economy, but inflation also began to soar, reaching a peak of 9.1% in June 2022.

Many economists and scholars have criticized the Federal Reserve for its slow response to the outbreak of inflation. The Fed did not completely stop buying bonds (the so-called quantitative easing) on the market until March 2022, and began raising interest rates at the fastest pace in nearly 40 years that month. The federal funds rate target range was raised to 5.25% to 5.5% in July last year and has remained unchanged since then.

Williams participated in a closed-door meeting over the weekend, and his speech was released on Monday.

As the President of the New York Federal Reserve and Vice Chairman of the Federal Open Market Committee (FOMC), with permanent voting rights on monetary policy, Williams is considered the "third person" of the Fed.

When asked whether the Fed might take different measures after the COVID-19 outbreak, Williams pointed out that everything was uncertain at the time.

"The top priority was to ensure the continued functioning of the financial system, starting with ensuring that the US Treasury market and related markets had sufficient liquidity," Williams said.

He said the Fed wanted to ensure that people have confidence that the economy can not only weather the challenges posed by the COVID-19 epidemic, but also avoid the trauma of the global financial crisis.

"The real issue is not, 'were your forecasts correct?' or 'could you have raised rates earlier?' but managing extreme risks," Williams said, adding that the Fed was very effective in completing this task.

Williams said when the Fed determined that inflation was rising from the "noisy" data, it acted decisively and quickly.

When discussing the current economic situation, Williams said he believed the Fed would bring the inflation rate down to its target level of 2%.

Federal Reserve officials regard the core personal consumption expenditures (PCE) price index as the preferred inflation indicator.

Data released last week by the Bureau of Economic Analysis showed that the US May PCE price index remained flat on a month-over-month basis, with a year-over-year increase of 2.6%; excluding volatile factors such as food and energy, the US May core PCE price index increased by 0.1% month-over-month and rose by 2.6% year-over-year.

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