Fed's Williams sees slower inflation, keeps door open to rate hikes

Federal Reserve Bank of New York President John Williams maintained an optimistic view that price pressures will ease gradually, while saying it would be entirely appropriate to raise interest rates if inflation is not on track to return to 2%, according to a Reuters interview. In the interview on July 31, local time, Williams said energy prices and trade tariffs had already passed their peak and, if the economy remains resilient, the main factors that pushed up inflation over the past year and a half would no longer play a major role. Williams added that the factors behind the earlier slowdown in inflation would begin to work again. Williams said he will watch core inflation data very closely over the coming months to see whether it is consistent with inflation converging to 2%, adding that he will work to achieve a stable long-term 2% inflation target by 2028. He also presented a personal outlook that inflation will ease somewhat in the second half of this year and decline further next year. While reaffirming that the current rate stance is in a favorable position to bring inflation back to target, Williams stressed that if inflation is not on a path to 2%, it would be entirely appropriate to act to correct that.