Federal Reserve No. 3 Official Williams: Interest rate outlook is uncertain, current policy is appropriately positioned

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John Williams, President of the Federal Reserve Bank of New York, said that the current U.S. monetary policy is appropriately positioned, but he believes there is no clear direction for future interest rate movements.

Williams said in an interview with Yahoo Finance on Wednesday:

"Monetary policy is in the right place. I believe there is currently no need to raise or cut interest rates; I also don't see any clear direction for future policy."

This contrasts with his more hawkish tone last week, when Williams said at an economic conference in Reykjavik, Iceland last Thursday:

"Currently, the Fed's policy is slightly tight, and before we need to make a decision on interest rate adjustments, we are in a favorable position to continue observing the progress of conflicts and other data."

The Fed has kept interest rates unchanged so far this year. However, as energy prices have surged, policymakers have debated how best to respond to inflation.

Several officials have warned that if shipping through the Strait of Hormuz is not restored soon, rate hikes may soon be necessary.

The Fed's preferred inflation gauge rose 3.8% year-on-year in April, marking the largest increase since 2023. The current unemployment rate is 4.3%, which some Fed officials consider close to full employment.

Fed policymakers will hold their next meeting in Washington on June 16-17, with newly appointed Chairman Kevin Walsh presiding.

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