Federal Reserve Governor Williams said he remains optimistic inflationary
pressures will ease but warned the Fed will not hesitate to raise rates if that
does not occur. In a Reuters interview he said if energy prices and trade
tariffs have peaked and the economy stays resilient, the main upward drivers of
inflation from the past 18 months should wane and disinflationary forces should
re-emerge. He is closely watching coming months' core inflation for consistency
with a downward trend toward 2% and said the Fed aims to secure a stable 2% rate
by 2028. Williams personally expects inflation to fall in H2 this year and to
decline further next year, and he reiterated that the current policy stance is
positioned to bring inflation back to target but that further tightening would
be appropriate if the 2% path is not achieved.
