Fed's Williams: Inflation is making progress, but the job remains unfinished
New York Fed President Williams said that although inflation has recently cooled toward the Fed's 2% target level, policymakers are still far from achieving the goal.
"Inflation is currently around 2.5% and we have made significant progress in bringing it down," Williams said at an event in Mumbai, India, on Friday. "But we still have some way to go to get to 2% sustainably. goal. We are committed to this mission.”
Earlier this week, the New York Fed president said he was "confident" the central bank was on track to achieve its 2% inflation target.
A report released last week showed the Fed's preferred inflation measure slowed in May, strengthening the case for the central bank to begin easing policy later this year. The so-called core personal consumption expenditures price index (PCE) rose just 0.1% from the previous month, the smallest increase in six months.
Fed officials kept interest rates steady at their highest in more than two decades at last month's policy meeting and signaled they expected fewer rate cuts this year than expected in March. Fed officials will meet again on July 30 and 31.
Asked about the impact of the Fed's balance sheet on U.S. stock valuations, Williams downplayed the direct link but noted that Wall Street's recent performance reflects economic conditions.
"The market is looking at the U.S. economy and I guess I can also say the Indian economy, the economy and the stock market are showing pretty consistent strength," he said during a question-and-answer session after his opening remarks.
He said: "In some cases, valuations are indeed a bit overvalued. But overall, the market reaction is a response to a more optimistic future in the United States." Global stock markets ahead of fresh U.S. employment data on Friday A record high, the data is expected to show hiring has slowed.
"The economy is doing really well. Unemployment is low, economic growth is good. So I think some of the positive momentum in the market is really based on that," Williams said.
In his speech, Williams emphasized the importance of "stably anchored" inflation expectations. He also pointed to "permanent challenges" such as measuring the so-called neutral rate.
The resilience of the U.S. economy has fueled discussions about the so-called long-term neutral rate, a level that neither stimulates nor inhibits activity.
Williams pushed back on recent comments that the neutral rate has risen since the pandemic. In his speech on Wednesday, he cited neutral interest rate forecasts, which he believed were close to pre-COVID-19 levels in the United States and the euro zone.
Officials raised their forecast for long-term interest rates in June to 2.8%, based on the median forecast, up from 2.6% at the March meeting. The increase follows a slight increase in March.
Nonfarm payroll data released on Friday showed that the U.S. unemployment rate rose again in June, but the number of jobs added in the U.S. in June was once again slightly higher than expected. The number of non-farm payrolls in the United States increased by 206,000 in June, which was greater than the expected 190,000. The previous value was revised down from 272,000 to 218,000. The average monthly increase in employment in the previous 12 months was 220,000; the unemployment rate unexpectedly rose to 4.1%, the highest level since November 2021; average hourly earnings in June increased by 3.9% year-on-year, the smallest increase since 2021.
Repost:;Jin Shi
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