New York Fed President signals policy determination, rate cuts could resume after tariff shocks subside

Jinse Finance reported that Federal Reserve's Williams stated that once most of the impact from tariffs fades and inflation slows further, further rate cuts would be reasonable. Williams did not mention the economic impact of the Iran conflict in his prepared remarks. Williams said: "If inflation follows the path I expect, the federal funds rate will ultimately need to be further reduced to prevent monetary policy from inadvertently becoming more restrictive." He added that tariffs will have an additional follow-up effect on consumer prices in the first half of this year, after which the inflation rate will drop to 2.5% by the end of 2026 and return to 2% in 2027. Meanwhile, Williams pointed out that the labor market has shown "encouraging signs of stability" in recent months, and driven by "robust" growth, the unemployment rate should continue to decline slightly this year and next year. He expects the economic growth rate to be about 2.5% this year. He said: "Given the lack of second-round effects and well-anchored inflation expectations, I expect tariffs to largely have a one-off impact on prices," adding that the peak impact of the tariffs will pass "later this year."