Fed officials call for more data, caution in cutting rates

The president of the Bank of the Federal Reserve of New York, John Williams, said that the United States “is moving in the right direction” but declined to say when he would favor lowering interest rates.

Williams He emphasized that any decision on the timing or extent of easing policy this year would depend on incoming economic data. Recent inflation figures have been encouraging, he said, and he expects price pressures to continue to ease.

“There are very good signs that supply and demand are balancing“, said Williams Tuesday during an interview with Fox Business. “I see that a disinflationary process continues and I hope that inflation will continue to fall in the second half of this year and next.”

The head of the New York Fed described the U.S. economy and labor market as strong, although he cited some slowdown in hiring.

Referring to employment data that has remained very strong in business surveys, despite signs of weakness in figures collected from households, Williams said that payroll reports “They might be exaggerating a little.”. The Fed will know more about this in the coming months, he said.

Fed bankers lowered their outlook for how much they plan to cut rates this year, with the median projection being just a decrease, according to forecasts released last week. Authorities also left their reference rate stable at a target range of 5.25% to 5.5%, a two-decade high reached last July.

Williams said last month that there was “ample evidence” that the Fed’s current policy settings are weighing on the economy and expected inflation to continue to cool in the second half of this year.

The New York Fed chief also deflected a question about whether the Fed can cut rates this fall without exposing the central bank to accusations of political favoritism.

“The most important thing is to make the right decision“, he said, and “ignore politics.”

You should not overreact in the face of positive data

Boston Federal Reserve Bank President Susan Collins said the U.S. central bank should be patient in considering when to lower interest rates, despite recent encouraging inflation data.

“It is too early to determine whether inflation is on a lasting path back to the 2% target.”Collins said Tuesday in prepared remarks for an event in Lawrence, Massachusetts. “We shouldn’t overreact to a month or two of promising news”.

“The appropriate approach to monetary policy continues to require patience”he added, reiterating statements he made at an Atlanta Fed conference on May 21.

Last week, Fed bankers lowered their outlook for rate cuts and now the median projection indicates only a cut in 2024. Officials also left their benchmark rate stable at a target range of 5.25% to 5.5%, a maximum of more than two decades reached last July.

His decision came on the same day that government data showed the underlying gauge of consumer prices had fallen to its lowest level in more than three years.

“In my opinion, the data suggests an economy in which demand and supply are reaching a better balance, as required to restore price stability.”Collins said. “However, this process may take longer than previously thought.”.

New York Fed President John Williams made similar comments Tuesday, saying the U.S. is moving in the right direction but did not say when he would favor lowering interest rates.