Fed's Williams Sees No Strong Case for a Rate Move Now

(Bloomberg) -- The Federal Reserve doesn’t need to move interest rates up or down at the moment, said one of the U.S. central bank’s top policy makers, though he is watching for evidence that recent inflation weakness proves temporary.

“I don’t see any strong argument today, based on what we have seen in the data or other information, to move interest rates one way or the other,” New York Fed President John Williams told reporters Wednesday during a press briefing in New York. “I’ll be watching developments over the next months and quarters to see how the economy is doing, how risks to the outlook evolve, and importantly how inflation trends move.”

His remarks closely followed the line taken by Fed Chairman Jerome Powell, who has pushed back against pressure for an interest-rate cut by investors and President Donald Trump by pointing to solid economic growth and unemployment at the lowest levels since the 1960s. Fed watchers will get more details on how officials see the risks when minutes of their meeting that wrapped up on May 1 are released at 2 p.m. in Washington.

Williams, who serves as vice chairman of the policy-setting Federal Open Market Committee, cited a so-called trimmed-mean measure of inflation produced by the Dallas Fed which stood at 1.96% in March, which he said was “a sign I think that underlying inflation is around 2%.” That refers to the Fed’s inflation target, which the central bank has missed for most of the last seven years. Powell also discussed the Dallas Fed’s trimmed mean gauge.

Williams said he was watching carefully for confirmation of the Fed’s “working hypothesis” that the softness in price pressures was indeed temporary.

“I’m not worried about inflation getting too high, but I definitely would like to see inflation to be at 2% our goal for an extended period of time,” he said.

To contact the reporter on this story: Matthew Boesler in New York at mboesler1@bloomberg.net

To contact the editors responsible for this story: Alister Bull at abull7@bloomberg.net, Scott Lanman

©2019 Bloomberg L.P.