Fed's Williams: Now Is an Appropriate Time to Gather More Information

The US economy remains remarkably resilient, with a stable and solid labour market, New York Federal Reserve (Fed) President John Williams said on Friday, according to Reuters.

What were the key messages?

"Inflation too high for too long."

"We've seen tariffs effect work way through, mostly now behind us."

"Energy prices showing up in airfares in expected way."

"We've seen narrow effect of AI in prices such as chips."

"Essential that we bring inflation to 2% in timely manner."

"Monetary policy takes a year or two to take effect, we have to be forward looking."

"Inflation expectations well anchored, wage growth consistent with goal."

"This is appropriate time to accumulate more information."

Does US economic resilience reinforce Williams’ concerns over persistently high inflation?

Support for the Dollar from a patient policy stance was the key market implication of Fed’s Williams’ remarks. His tone was moderately more hawkish than the historical average: the FXS Speechtracker score stood at 6/10 against a 5.4/10 baseline, reflecting his emphasis on a “remarkably resilient” US economy, firmer growth and a robust labour market. Although tariff and energy effects were characterised as largely behind us and inflation expectations as well anchored, his assertion that inflation has been “too high for too long”, alongside the view that a timely return to 2% is “essential”, points to a preference for maintaining restrictive policy while remaining guided by incoming data. By describing this as an “appropriate time to accumulate more information”, Williams indicated a preference for waiting and assessing developments rather than easing imminently. That stance should curb the Dollar’s immediate downside, notwithstanding some nuance concerning temporary price drivers.