① The President of the New York Fed, Williams, believes there is no need to change the Federal Reserve's interest rate policy in the short term, although Trump's tariffs may push up inflation, weaken economic growth, and increase unemployment. ② Williams emphasized that the Federal Reserve must ensure inflation does not continue to rise and bring inflation back to the target level of 2%.
On April 18, the Financial Association reported (Editor: Huang Junzhi) that John Williams, the President of the New York Fed, stated on Thursday that he believes there is no immediate need to change the Federal Reserve's interest rate policy, even though tariffs from the Trump administration may drive inflation up, weaken economic growth, and raise unemployment.
In a recent interview, Williams said, "I believe the monetary policy is well-positioned. I think there is no need to change the federal funds rate setting in the short term."
As the President of the New York Fed, Williams also serves as the Vice Chair of the Federal Open Market Committee (FOMC) and holds permanent voting rights like Fed governors, being regarded as the "third person" in the institution. In terms of monetary policy, his influence is second only to Chairman Powell.
Williams pointed out in the interview that there is considerable uncertainty in the economic outlook.
He reiterated his view that as President Trump significantly increases import taxes, at least for now, it has raised price pressures, and unemployment is expected to rise from the current 4.2% to between 4.5% and 5%, with this year's economic growth potentially slowing to below 1%.
"This is not a recession, just a slowdown in the economic outlook, with growth rates slower than in the past few years," he added.
The Federal Reserve official did not disclose to what extent he expects Trump's increase in import taxes will drive up inflation, but he stated, "This year we will definitely feel the impact of the tariff war on prices and inflation.
Williams emphasized that the Federal Reserve must ensure that inflation does not continue to rise.
"We need to ensure that any one-time changes in prices do not trigger more persistent high inflation. We need to bring inflation back to 2%... and sustain it. Controlling inflation expectations remains important," he added.
The day before Williams' interview, Federal Reserve Chairman Jerome Powell also spoke, warning that tariffs would bring higher price pressures and higher unemployment, which may force the Federal Reserve to choose which battle to prioritize. Powell noted that the Federal Reserve would wait for more economic data before considering a rate adjustment.
Powell's remarks again drew criticism from President Trump. Currently, although the inflation rate is above the target, the president still hopes the Federal Reserve will cut rates. Trump also threatened to remove Powell from his position, saying he should be dismissed "as soon as possible."
These remarks led to Powell facing criticism from the president once again, who wants the Federal Reserve to cut rates amid high inflation. The president also seems to have threatened Powell's job, saying removal should happen "more quickly."
He wrote on social media: "Jerome Powell of the Federal Reserve is always too slow to react, always wrong; he issued a typical, full-blown mess of a report yesterday!"
However, even if Trump wants to fire Powell, it is unclear whether the law would support such an action, and in an already unstable financial environment, it would almost certainly trigger a major market crisis. Powell's current term as Federal Reserve Chairman will last until next year.
Editor/danial
