Like a lunar rocket, inflation has shot up and come back down but has yet to land safely, New York Fed President John Williams said Wednesday.

“While we’ve seen great progress toward achieving our goals, the journey is not yet over, and I am very focused on making sure we complete this mission successfully,” Williams said in a speech at an aviation museum on Long Island.

“We still have a ways to go on the journey to sustained 2% inflation,” he added.

Williams said the New York Fed’s measure of core inflation, called the Multivariate Core Trend Inflation, is running at 2.3% annual rate in December, down from 5.5% in June 2022.

Williams said there are likely to be “bumps” along the way. Still, he expects the Fed’s favorite inflation measure, the personal consumption expenditure price index, will fall to a range of 2%-2.25% this year. That’s a slight improvement from December when Williams forecast a 2.25% inflation rate this year. Williams said he sees PCE inflation at 2% in 2025.

Williams said he expects U.S. GDP to slow to about 1.5% annual rate this year, down from a 2.5% rate in 2023. The unemployment may rise modestly to about 4%, he added. Williams said the current unemployment rate of 3.7% was near his estimate for how low the unemployment rate can be without putting upward pressure on inflation.

“In summary, the economy is strong, imbalances and diminishing and inflation has come down but remains above our 2% longer-run target,” Williams said.

What does that mean for monetary policy?

In a recent interview with Axios, Williams said he thought the Fed could start to cut interest rates later this year.

Williams said there were risks that inflation might surprise on the upside. But at the same time, the economy might falter if consumers pull back unexpectedly.


were lower in early afternoon trading while the 10-year Treasury note yield
slipped to 4.89%.

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