US FOMC Member Williams Speaks

Good morning, and welcome to the New York Fed. We’re so pleased to host you for today’s event. Over the next few hours, we’ll share perspectives on topics that are important to you as representatives of community and regional banks across the Federal Reserve’s Second District. If you’ve been here and heard similar remarks before, you may recall that this is the point where I offer a crucial piece of information. And that’s the standard disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. The next crucial piece of information that I’ll mention, on which I know you all agree, is that community and regional banks play a central role in this country’s robust financial system a post: FED’S WILLIAMS: HOUSEHOLDS, FIRMS SEEING ‘HEIGHTENED UNCERTAINTY’ FED’S WILLIAMS DOES NOT COMMENT ON MONETARY POLICY OUTLOOK IN PREPARED REMARKS

post: Fed's Williams: The Central Bank's current forecasted rate path looks reasonable. post: Fed's Williams: The University of Michigan inflation expectations data is an outlier. post: financialjuice: Fed's Williams: The Central Bank has gotten more clarity on the Trump policy agenda. post: Fed's Williams: I take comfort in the stability of longer-term inflation expectations. post: <=USD>:*WILLIAMS: TRUMP CHANGES POINT TO LOWER GROWTH, MORE UNEMPLOY. *WILLIAMS: WATCHING UMICH INFL. DATA, SAYS IT MOVES AROUND A BIT ?*FED'S WILLIAMS: MEDIAN PROJECTION IN SEP SEEMS REASONABLE ?*WILLIAMS: TARIFF EFFECT MAY BE SHORT-LIVED, BUT STILL UNCLEAR pic.twitter.com/vquMdIuY29

Good morning, everyone. I’m so pleased to be here with you today. As it says on my CV, monetary policy under uncertainty has been my primary area of research. And after 30 years in central banking, I can unequivocally say: Uncertainty is the only certainty in monetary policy.1 Today I will discuss the economy and monetary policy in the context of a changing and uncertain landscape. I’ll talk about global inflationary trends, inflation expectations, and how the Federal Reserve is working to achieve its dual mandate of maximum employment and price stability. Before I go further, I must give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. post: FED’S WILLIAMS: CURRENT MODESTLY RESTRICTIVE MONETARY POLICY IS ‘ENTIRELY APPROPRIATE’ CURRENT RATE POLICY FITS WITH 'SOLID' JOB MARKET AND ABOVE-TARGET INFLATION THERE IS A LOT OF UNCERTAINTY IN ECONOMY AND POLICY RIGHT NOW EXPECTS GROWTH TO SLOW IN PART DUE TO LOWER…

It’s a pleasure to be here today and to have the opportunity to comment on the paper “Monetary Policy Transmission to Real Activity.” This is my fourth time as a discussant at this conference, and I am sure that I speak on behalf of everyone here in thanking the authors for keeping their paper to only 23 pages. This is a welcome improvement over the lengthy tomes of yore that threatened to breach the 100-page mark—not to mention e-mail attachment size limits. The paper provides a clear and succinct analysis of the timing and magnitude of effects of monetary policy shocks on spending and employment, both in the aggregate and across sectors. It adds to an extensive research literature that has focused on these issues, and the analysis and results are broadly consistent with those in past studies. In a nutshell, monetary policy shocks have their largest effects on housing, business investment, and spending on consumer goods—in that order. The peak effect on GDP occurs after a year and half, and on employment, it takes two years. Of course, there are differences across models and times, as well as uncertainty bands around these results, but this captures the main findings of the paper. I’ll admit that given the clarity of the paper and the uncontroversial results, I was somewhat at a loss in terms of what value I could add as a discussant. Fortunately, a passage in the paper provided a way out of this dilemma. In describi post: Fed’s Williams: There are no signs of inflation expectations becoming unmoored. post: Fed’s Williams: Data shows a lag before inflation shock hits short-term expectations. post: Fed’s Williams: Inflation expectations back to pre-pandemic levels. post: Fed’s Williams does not comment on monetary policy or the economic outlook.

post: Fed's Williams: there's still a lot of uncertainty how tariffs will play out. post: FED'S WILLIAMS: MONETARY POLICY IS STILL RESTRICTIVE, HAS THE RIGHT BALANCE RIGHT NOW post: Fed’s Williams: MonPol In A Good Position, Can Be Adjusted As Needed - Growth Expected To Slow From 2024 Pace post: NYFED'S WILLIAMS Q&A/BBG: MARKETS THINKING OF VARIOUS RATE-CUT POSSIBILITIES; 'MODAL' EXPECTATION MAY ONE THIS YEAR; OTHERS SEE SEVERAL #Williams #FederalReserve #economy

Connecticut is home to many important business ideas and inventions: the toothpaste tube, the can opener, and the Frisbee, which everyone knows really originated here, not in California. And in 1889, inventor William Gray installed the world’s first payphone just a short walk from where we are gathered today. He turned a personal need into a business opportunity. As the saying goes, necessity is the mother of invention. There’s a wonderful legacy of Connecticut business leadership. And I’m honored to speak before the entrepreneurs and innovators here today who are building a dynamic economy and ensuring a strong future for the state. In recent years, swings in inflation and the labor market have greatly affected businesses—undoubtedly including many of yours. So today, I’m going to discuss the rise and fall of inflation—from unacceptably high to within striking distance of the Fed’s 2 percent longer-run goal—as well as the labor market’s return to balance. I’ll also talk about how monetary policy is working to achieve the Fed’s dual mandate of maximum employment and price stability. And finally, I’ll speak about what’s going on specifically in this region before providing my economic outlook. Before I continue, I will give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. Where the Economy Stand post: Fed's Williams says monetary policy is data-dependant in highly uncertain environment post: FED’S WILLIAMS: MONETARY POLICY IS WELL POSITIONED FOR ECONOMIC OUTLOOK. post: FED’S WILLIAMS: DISINFLATION PROCESS TO CONTINUE BUT COULD BE CHOPPY. post: FED’S WILLIAMS: I SEE THE MOVE TO 2% INFLATION OVER THE COMING YEARS.