Fed's Williams says monetary policy is well positioned amid a favorable outlook

New York Fed President John Williams said monetary policy is close to neutral and well positioned to support the labour market and a return to 2% inflation, and he indicated he sees no near-term reason to cut interest rates.

New York Federal Reserve Bank President John Williams said on Monday he expects a healthy economy in 2026 and sees no near-term reason to cut interest rates. He spoke at a Council on Foreign Relations event in New York and described the Federal Open Market Committee's stance as moved closer to neutral. Williams said monetary policy is well positioned to support labour market stabilization and a return to the Fed's 2% inflation goal. His remarks came as the central bank faced recent legal developments involving its leadership. Key points: - Williams said he expects GDP growth of about 2.5%–2.75% for the year and that inflation pressures should peak around 2.75%–3% in the first half before easing to about 2.5% for the year; he sees inflation returning to 2% by 2027. - He noted downside risks to employment have increased as the labour market cooled, while upside risks to inflation have lessened. - The Fed cut its short-term policy rate by three-quarters of a percentage point last year to a 3.5%–3.75% range and is widely viewed as in a holding pattern. - Williams said there is no near-term reason to cut rates and that policy is now closer to neutral and positioned to support the labour market and price stability. - The remarks came after Fed Chair Jerome Powell said the central bank had been served with grand jury subpoenas related to renovation cost overruns; Powell characterized the moves as pretexts and Williams warned against actions that could compromise central bank independence. Summary: Williams presented a cautiously favorable economic outlook while emphasizing that monetary policy is positioned to balance labour market stability and the return of inflation to 2%. Officials had penciled one more rate cut in December, but Williams indicated no urgent need to lower rates now. Undetermined at this time.