John Williams emphasized that the Federal Reserve’s monetary policy will be primarily influenced by economic data, given the current HIGH level of uncertainty. He noted that future decisions will reflect changes in the economic landscape, particularly regarding government policy.
The Federal Reserve recently reduced its target federal funds rate by 0.25% to a range of 4.25% to 4.5%. This decision accompanies updated forecasts that show an increase in inflation expectations due to persistent price pressures.
Williams indicated that while the economy appears stable post-pandemic, the return of Donald Trump brings potential uncertainties regarding inflation and fiscal policies. He projects GDP growth will moderate to around 2%, with unemployment steady between 4% and 4.25%.