Fed’s Williams Says Rates Well Positioned Amid War Uncertainty

John Williams, president and chief executive officer of the Federal Reserve Bank of New York, during a Bloomberg Television interview in New York, US, on Tuesday, April 7, 2026. Williams said his outlook for underlying price pressures in the US was largely unchanged despite his expectation that higher energy costs stemming from the war in Iran will boost overall inflation. Photographer: Michael Nagle/Bloomberg Photo by Michael Nagle /Bloomberg

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(Bloomberg) — Federal Reserve Bank of New York President John Williams said the US central bank’s current stance balances risks to price stability and full employment amid “notable” supply-chain disruptions from the Iran war. 

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“The elevated levels of inflation, mixed signals from the labor market, and heightened uncertainty from the Middle East conflict present an unusual set of circumstances, but the current stance of monetary policy is well positioned to balance the risks,” Williams said Monday in remarks prepared for an event in New York City.

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The Fed left interest rates unchanged last week, though three officials dissented against the “easing bias” in the central bank’s post-meeting statement, favoring language signaling the next rate move could be either a hike or a cut.

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In his remarks, Williams steered clear of that debate. He drew parallels between the supply-chain disruptions from the Iran war — as evidenced in recent surveys of purchasing managers — and those in the post-pandemic period, while also suggesting the scope for sustained inflation could be less this time.

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“This echoes the severe shortages and supply disruptions that the world economy experienced in 2021 as it emerged from the pandemic. Unlike then, the labor market is not adding to inflation pressures,” Williams said.

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“In addition, underlying inflation outside of imported goods and energy has so far remained stable, and there are still no signs of significant second-round effects from tariffs spilling over to the rest of the economy.”

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The war has pushed gas prices in the US to the highest levels since 2022, complicating the Fed’s ability to bring inflation down to its 2% goal after five years above the target. Williams said he sees inflation reaching about 3% this year before easing back to 2% in 2027.

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The New York Fed chief also said he expects the US economy to grow between 2% and 2.25% this year and next, with the unemployment rate remaining in its recent range of 4.25% to 4.5%.

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