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John Williams says inflation should resume decline after energy shock

The New York Fed president reiterated a personal forecast for inflation to ease in the second half of this year, contingent on core trends moving sustainably toward the Fed’s 2.0% goal.

Reported · Written up by our desk · Central Banks

New York Fed President John Williams told Reuters he remains confident inflation will gradually resume its decline even after the recent surge in energy prices. He said the broader disinflation process is unlikely to be derailed if energy costs and tariffs have peaked and the economy stays resilient.

Williams argued that the drivers that pushed inflation higher are not expected to remain as influential, while disinflationary forces the Fed has been seeing should reassert themselves. His personal forecast calls for inflation to ease during the second half of this year and decline further next year.

He emphasized that policymakers are watching whether underlying inflation is returning sustainably toward target, with particular focus on core inflation data over the coming months. Williams said the Fed needs evidence inflation is on a disinflationary path consistent with achieving its 2.0% inflation goal on a sustained basis by 2028.

Williams also said the Fed’s current policy stance is well positioned following last week’s decision to leave the federal funds target range unchanged at 3.50% to 3.75%. At the same time, he warned that if the economy is not on a path to bring inflation back to 2.0%, it would be appropriate for the Fed to tighten again.

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