Fed’s Williams Says No Obvious Direction Ahead for Rates

John Williams, president and chief executive officer of the Federal Reserve Bank of New York, at the Reykjavik Economic Conference in Reykjavik, Iceland, on Thursday, May 28, 2026. Central-bank governors from several advanced economies are scheduled to attend the conference. Photographer: Betty Laura Zapata/Bloomberg Photo by Betty Laura Zapata /Bloomberg

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(Bloomberg) — Federal Reserve Bank of New York President John Williams said US monetary policy is well positioned for now but he sees no obvious direction for the future path of interest rates. 

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“Monetary policy is exactly in the right place. I don’t see any need to raise or lower interest rates right now,” Williams said Wednesday during an interview with Yahoo Finance. “I also don’t see an obvious kind of direction where we would go in the future,” he added.

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Fed policymakers are expected to debate a change in their post-meeting statement when they gather June 16-17 in Washington under the leadership of new Chairman Kevin Warsh. Many officials want to drop a line signaling the central bank’s next move is still likely to be a cut.

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Williams said inflation remains high with energy prices, tariffs and investments related to artificial intelligence all adding upward pressure. Still, he said, services inflation is slowing “quite a bit.” 

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“Depending on what happens in the Middle East, hopefully energy prices will stabilize, and maybe even come down later when the Strait reopens,” he said, referring to the blocked Strait of Hormuz in the Persian Gulf. “Right now I’m not that worried about dramatic, second-round effects or persistent inflation.”

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New tariffs proposed by the Trump administration this week aren’t likely to be a large driver of inflation, he said. Unemployment, he added, is stabilizing. 

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The Federal Reserve has so far kept rates steady this year, though a debate has emerged among policymakers about the appropriate response to inflation amid surging energy prices. A number of officials have warned a rate hike could soon be necessary if shipping traffic through the Strait of Hormuz is not soon restored. 

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The Fed’s preferred measure of inflation hit 3.8% in April from a year earlier, the largest increase since 2023. Unemployment currently stands at 4.3%, a level some Fed officials have characterized as around full employment.

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Williams said there are signs higher energy prices are hitting household spending, though the economy continues to benefit from investment in AI. He said he expects the economy to grow by around 2% to 2.25% this year.

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(Updates with additional Williams comments from third paragraph.)

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