Latest news with #JohnWilliams
Yahoo
3 days ago
- Business
- Yahoo
Fed officials grow more outspoken—and split—over interest rate cuts
Federal Reserve governor Christopher Waller called for a July rate cut again on Friday. Other Fed officials like New York Fed president John Williams and Boston president Susan Collins said July was too early to lower rates because the extent of inflation from tariffs wasn't clear yet. As the U.S. economy navigates that hazy outlook, Fed officials are trying to figure out whether to cut rates to avoid a rise in unemployment or to maintain them because tariffs could lead to more inflation. A consensus on interest rate cuts is becoming elusive. Federal Reserve officials are having a hard time agreeing on what lies ahead for the U.S. economy in a time of unprecedented tariffs, a straining debt ceiling, and political upheaval. Throughout the spring, the Fed was mostly in agreement there was no rush to cut interest rates. The central bank was content to wait and see how exactly President Donald Trump's tariff policy would impact the economy. A series of revised forecasts in the aftermath of the tariffs called for lower growth and rising inflation. But the details themselves were still debated: How high would inflation go? How long would it last? Would businesses layoff employees if growth stalls? Now, three months on from the early-April tariff announcement, Fed officials are starting to formulate their own answers to those questions. Among the most dovish officials are Fed Board governors Michelle Bowman and Christopher Waller, who believe rate cutting should begin as early as this month. In two public appearances on Thursday and Friday, Waller called for rate cuts to start at the Fed's meeting on July 29-30. Others like John Williams, president of the Federal Reserve Bank of New York, and Susan Collins, president of the Federal Reserve Bank of Boston, see a July rate cut as too early because there is still the possibility of further inflation over the course of the year. These two schools of thought don't just differ on the timing of rate cuts, but on what is the larger threat to the economy: mass layoffs or soaring inflation. Those in Waller and Bowman's camp fear middling growth will cause the U.S. to flatline, forcing businesses to cut costs, including by shedding employees. On the other hand, those who favor holding rates believe a cut would only exacerbate the accelerating inflation they see as likely, if not certain. The prevailing view is that the Fed will keep interest rates steady at its upcoming meeting. The CME FedWatch tool sees a 95% chance of a rate hold at the upcoming meeting. On Friday in an interview with Bloomberg TV, Waller outlined the case for a rate cut he saw as necessary to push a teetering labor market toward safety. The labor market's solid headline numbers masked a weakening in the private sector, Waller argued. The latest Bureau of Labor Statistics report from June outpaced expectations, with the U.S. adding 147,000 jobs and an unemployment rate of 4.1%. An earlier report that specifically tracks the private sector showed it had lost 33,000 jobs in June. Waller said he wanted the Fed to act now, before the labor market turned for the worse. 'If you're walking on a lake and the ice is frozen, it sounds safe but when you start hearing cracks—and that's what I feel like—it's too late once you go through the ice,' Waller said. 'So you've got to start prepping in advance before you have that happen.' Waller's more hawkish colleagues are wary of cutting rates and loosening monetary policy at a time they believe it should remain restrictive. Inflation started to creep up in June, according to the Consumer Price Index report released this week. Prices rose 2.7% over the last 12 months, an uptick from 2.4% in May. The most recent CPI also showed early signs tariffs were pushing prices higher. Consumer staples like clothes, toys, and electronics, which are the exact sorts of products that rely heavily on foreign manufacturing, all saw their prices increase. 'For items that are more exposed to higher tariffs…price increases so far this year have been well above what one would expect based on past trends,' Williams said on Wednesday. Few dispute prices will rise because of tariffs. The split is over whether they will persist or smooth out quickly. Most economists argue any increases are only now starting to show up in the economic data because many companies had stockpiled inventory anticipating the tariffs. Textbook economics would suggest tariffs only lead to a one-time price shock. At the same time, the Trump administration's goal with its signature tariff policy has been to rewrite the rules of global commerce, making for little historical precedent to guide Fed officials and economists. Waller preferred to look through the inflation risk. 'With inflation near [the Fed's 2%] target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,' he said on Thursday. The Fed's debates about monetary policy come against a bellicose political backdrop, in which the central bank's traditional independence is eroding. Earlier this week, there were multiple reports Trump was preparing to fire Fed chair Jerome Powell, with whom he disagrees with for not lowering interest rates. Markets tanked on the news. They then shot back up when Trump denied the report. Members of the administration are also laying the groundwork for a series of political attacks over the $2.5 billion renovations to the Federal Reserve's Eccles Building in Washington D.C. Certain White House officials said they believe the cost overruns on the project and Powell's testimony about some of the building's planned design features may amount to mismanagement and cause for termination. The acrimony—albeit one-sided—between the White House and the Fed adds a new dimension to what might otherwise be ordinary internal policy deliberations. 'Comments coming from Fed officials suggest the Federal Open Markets Committee is cleaving, with a vocal side arguing for rate cuts to begin now, and another side (including Jay Powell) still wanting a delay,' Macquarie global rates strategist Thierry Wizman wrote in a note on Friday. 'It could evolve into a split along political lines, with one side swayed by political motives, and the need to accommodate fiscal policy, at the expense of adherence to the price-stability mandate.' But while politicians like Trump have waded into the Fed—once considered taboo—the central banks officials have not crossed the line themselves. Powell declines to answer all questions about Trump or his policies. On Thursday when Waller was asked if he'd spoken to any White House officials about possibly succeeding Powell, he gave a one word answer: 'Nope.' Williams brushed off the D.C. machinations. 'We've got a job to do,' he said. This story was originally featured on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
5 days ago
- Business
- Yahoo
Williams Says Fed's Restrictive Stance Is Entirely Appropriate
(Bloomberg) -- Federal Reserve Bank of New York President John Williams said he expects tariffs to have a bigger impact on inflation in the months ahead, making the US central bank's current restrictive stance 'entirely appropriate.' The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say 'Although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months,' Williams said Wednesday in remarks prepared for an event organized by the New York Association for Business Economics. 'Maintaining this modestly restrictive stance of monetary policy is entirely appropriate.' The Fed has so far held its benchmark rate steady this year and is widely expected to continue doing so when officials gather in Washington at the end of July. Investors are betting the next rate cut will come in September, according to futures. Williams said he sees tariffs adding about one percentage point to inflation through the second half of the year and into 2026. A weaker dollar 'likely will add somewhat to inflationary pressure going forward' as well, he said. Inflation data earlier this week indicated President Donald Trump's tariffs on imports have begun to make some goods more expensive. Still, overall consumer prices rose less than expected for a fifth straight month, in part due to more muted increases in services costs. 'We are seeing initial effects of tariff increases on core goods prices,' Williams said, pointing to items like household appliances, musical instruments, luggage and tableware. The New York Fed chief said he expects economic growth to slow to about 1% this year, and the unemployment rate to rise to around 4.5%. Speaking to reporters after the speech, Williams declined to comment directly on reports from earlier Wednesday that President Donald Trump would seek the removal of Fed Chair Jerome Powell. Trump later denied the reports. But the New York Fed chief stressed the importance of an independent central bank to the health of the country's economy. 'It delivers better results for the country, for the people the country, in terms of price stability, economic stability,' he said. Asked about the status of the US dollar, which has declined more than 8% this year against a basket of developed market currencies, Williams said he was not worried about the appeal of the greenback. 'The reserve currency status of the US dollar is still very much in place,' he said. 'There are a lot of fundamental factors that support the role of the dollar in the US, in global trade and in global financial markets, and that I see is unchanged.' He said global investors are still attracted to dollar-denominated assets, but many are also preferring to hedge that exposure more than in the past. (Updates with Williams comments on central bank independence and US dollar in last six paragraphs.) How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All Forget DOGE. Musk Is Suddenly All In on AI How Hims Became the King of Knockoff Weight-Loss Drugs The Quest for a Hangover-Free Buzz Thailand's Changing Cannabis Rules Leave Farmers in a Tough Spot ©2025 Bloomberg L.P.
Yahoo
5 days ago
- Business
- Yahoo
Some Fed officials hold firm on wait-and-see rate stance despite Trump pressure
Some Federal Reserve policymakers are not budging from their view that rates should remain where they are despite the intensifying pressure from President Trump and his allies to ease monetary policy immediately. Federal Reserve Governor Adriana Kugler and New York Fed president John Williams both made this argument in speeches delivered Wednesday night and Thursday morning, citing the risk of inflation pressure from tariffs. 'With the unemployment rate still at historically low levels, elevated short-run inflation expectations, and goods inflation rising due to the upward pressure from tariffs, I find it appropriate to hold our policy rate at the current level for some time,' Kugler said in a speech in Washington. 'I judge that inflation is likely to increase further as tariff effects build up during the rest of the year.' On Wednesday Williams stressed that he thinks that tariffs are already pushing up inflation and that will increase in the coming months. He expects tariffs will push up inflation by a full percentage point in the second half of this year and into the first part of 2026. 'Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,' Williams said in his speech Wednesday night. Opposing camps now forming inside the central bank on the question of Trump's tariffs and how they will affect how the Fed acts on rates. Two other Fed governors, Christopher Waller and Michelle Bowman, have argued for cuts as early as the next meeting July 29-30. Waller last week reiterated that any inflation from tariffs will be temporary, justifying a looser approach. 'I think we're just too tight and we could consider cutting the policy rate in July,' said Waller, adding, 'It's not political.' Waller's arguments carry increasing weight since he is considered to be among the candidates to replace Jerome Powell as Fed chair next May, when Powell's term is up. 'We're not seeing a lot of tariff inflation yet,' Waller added last week. 'For that reason, I've been arguing that we could start lowering the policy rate from our current setting.' These views align with those of Trump, who has repeatedly called on the Fed and Powell to ease monetary policy, citing what he views as a lack of inflation thus far from tariffs and the savings that could be made if the US were paying lower interest on its debt. Powell has argued for more time to assess whether inflation does in fact move higher over the summer. Williams made a similar argument Wednesday, saying holding rates steady will allow more time to assess the data. He said he anticipates inflation will come in between 3 and 3.5% percent this year and then fall back to about 2.5% next year before reaching 2% in 2027. The Fed's goal is to get inflation back down to 2%. Kugler noted the still-restrictive policy stance is important to keep longer-run inflation expectations anchored. She said she is not seeing any progress on headline and core inflation the past six months, noting that goods inflation has gone up and that reflects some pass through of increased tariffs. Kugler stressed that businesses may not yet be passing the higher tariffs to their selling prices because they are waiting for greater clarity. She also noted that tariff rates could increase further, as seen in newly proposed reciprocal tariffs for several countries and the new tariffs on copper introduced last week, putting further upward pressure on prices. Click here for in-depth analysis of the latest stock market news and events moving stock prices
Yahoo
5 days ago
- Business
- Yahoo
Some Fed officials hold firm on wait-and-see rate stance despite Trump pressure
Some Federal Reserve policymakers are not budging from their view that rates should remain where they are despite the intensifying pressure from President Trump and his allies to ease monetary policy immediately. Federal Reserve governor Adriana Kugler and New York Fed president John Williams both made this argument in speeches delivered Thursday morning and Wednesday night, citing the risk of inflation pressure from tariffs. 'With the unemployment rate still at historically low levels, elevated short-run inflation expectations, and goods inflation rising due to the upward pressure from tariffs, I find it appropriate to hold our policy rate at the current level for some time,' Kugler said in her Thursday speech in Washington, D.C. 'I judge that inflation is likely to increase further as tariff effects build up during the rest of the year.' On Wednesday night, Williams stressed that he thinks that tariffs are already pushing up inflation and that will increase in the coming months. He expects tariffs will push up inflation by a full percentage point in the second half of this year and into the first part of 2026. 'Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals," Williams said in his speech. Opposing camps are now forming inside the central bank on the question of Trump's tariffs and how they should affect what the Fed does on rates. Two other Fed governors, Christopher Waller and Michelle Bowman, have argued for cuts as early as the next meeting July 29-30, which is not an outcome investors expect. Waller last week reiterated that any inflation from tariffs will be temporary, justifying a looser monetary policy approach. 'I think we're just too tight and we could consider cutting the policy rate in July,' said Waller, adding, 'It's not political.' Waller's arguments carry increasing weight since he is considered to be among the candidates to replace Jerome Powell as Fed chair next May, when Powell's term is up. 'We're not seeing a lot of tariff inflation yet,' Waller added last week. 'For that reason, I've been arguing that we could start lowering the policy rate from our current setting.' These views align with those of Trump, who has repeatedly called on the Fed and Powell to ease monetary policy, citing what he views as a lack of inflation thus far from tariffs and the savings that could be made if the US were paying lower interest on its debt. Powell has argued for more time to assess whether inflation does in fact move higher over the summer. Williams made a similar argument Wednesday, saying holding rates steady will allow more time to assess the data. He said he anticipates inflation will come in between 3 and 3.5% percent this year and then fall back to about 2.5% next year before reaching 2% in 2027. The Fed's goal is to get inflation back down to 2%. Kugler noted the still-restrictive policy stance is important to keep longer-run inflation expectations anchored. She said she is not seeing any progress on headline and core inflation the past six months, noting that goods inflation has gone up and that reflects some pass through of increased tariffs. Kugler stressed that businesses may not yet be passing the higher tariffs to their selling prices because they are waiting for greater clarity. She also noted that tariff rates could increase further, as seen in newly proposed reciprocal tariffs for several countries and the new tariffs on copper introduced last week, putting further upward pressure on prices. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Zawya
6 days ago
- Business
- Zawya
Fed's Williams says tariff economic impact is only just starting
NEW YORK: Federal Reserve Bank of New York President John Williams said Wednesday that monetary policy is in the right place to allow central bankers to monitor the economy before taking their next steps, while warning that the impact of trade tariffs is only just starting to hit the economy. 'Maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,' Williams said in a speech given before a gathering of the New York Association for Business Economics. Holding at current levels 'allows for time to closely analyze incoming data, assess the evolving outlook, and evaluate the balance of risks to achieving our dual mandate goals.' Williams said that the current state of the economy is good and labor markets are solid, although he expects both of those to moderate as the year advances. The bank president pointed to ongoing uncertainty and warned against complacency over the impact of President Donald Trump's import tax surge. 'It's important to note that it's still early days for the effects of tariffs, which take time to come into full force,' Williams said. 'Although we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months.' 'I expect tariffs to boost inflation by about 1 percentage point over the second half of this year and the first part of next year,' he added. Williams said that he expects the economy to slow to around a 1% growth rate this year, and for the unemployment rate, now at 4.1%, to rise to 4.5% by year's end. On the inflation front, Williams said he sees inflation coming in between 3% and 3.5% this year, before ebbing back to 'about' 2.5% next year. Williams sees inflation at the 2% target in 2027. He also said that he expects inflation in June to stand at 2.5% and core prices at 2.75%. Williams weighed in on what had proved to be a tumultuous day for the central bank, as markets were buffeted by reports that Trump was moving closer to firing Fed Chairman Jerome Powell, a notion which the president later knocked down. 'I can't comment' on what the president said and how markets reacted, Williams told reporters after his speech. Responding to a question about what he would do as vice-chairman of the rate setting Federal Open Market Committee if Powell were removed, Williams said independent central banks deliver better results and noted that in his experience Fed officials and staff maintain a 'laser-like' focus on the central bank's overall mission and its work to keep inflation contained and the job market strong. Trump has repeatedly blasted the Fed for not cutting rates, arguing the central bank needs to move the cost of short-term credit down to crisis levels. Meanwhile, most Fed officials say they are in a wait-and-see mode regarding rate cuts, as they look to see how the president's tariffs will affect inflation, which even now is at levels that stand above the Fed's 2% target level. At the Fed's June policy meeting, officials penciled in two rate cuts for later this year and markets believe the easings could start at the September FOMC meeting. That said, a small minority of Fed officials have suggested an openness to cutting rates at the July 29-30 meeting, believing that any tariff-driven inflation will be a one-off that officials can ignore. Williams also told reporters that amid a drop in the dollar its status as the preeminent reserve currency remains unchanged. 'There are a lot of fundamental factors that support the role of the dollar … in global trade and in global financial markets, and that I see is unchanged now.' (Reporting by Michael S. Derby; editing by Diane Craft)
