Federal Reserve Bank of New York President John Williams said he anticipates tariffs will contribute to inflation, but emphasized there is a lot of uncertainty about how the economy will respond to President Donald Trump’s levies.
“Based on what we know today, given all the uncertainties around that, I do factor in some effects of tariffs now on inflation, on prices, because I think we will see some of those effects later this year,” Williams said Tuesday during the Bloomberg Invest conference in New York.
You also “have to factor in how does that affect economic activity — decisions by businesses to invest, consumers to spend?” Williams said. “And that’s where I think another big uncertainty is.”
When asked whether policymakers will consider adjusting interest rates at this month’s meeting, Williams said monetary policy is in a good place and that he doesn’t see the need to adjust borrowing costs right away. He described policy as “modestly restrictive,” and said he expects inflation to move toward the central bank’s 2% goal over time.
Policymakers left borrowing costs unchanged in January after lowering their benchmark interest rate by a full percentage point late last year. Officials have said they want to leave rates steady until they see more evidence inflation is on track to reach 2%.
During the conversation with Bloomberg Television’s Michael McKee, Williams said he expects good growth this year, albeit slower than last year.
Stock markets around the globe plunged this week, reflecting President Trump’s sweeping tariffs on America’s largest trade partners and mounting worries about the growth outlook. The US levied 25% tariffs on most goods from Canada and Mexico and doubled tariffs on China to 20%.
Investors now expect the central bank to lower rates three times this year, according to the futures market.
The escalating trade war, paired with data pointing to some softness in the economy at the start of the year, has fueled concerns that officials may soon face an environment of slower growth and above-target inflation — a scenario that could force policymakers to make tough decisions between its employment and price stability goals.
The Labor Department will offer an update on the job market on Friday. Officials will meet for their next policy gathering on March 18-19.
--------
Watch Bloomberg Radio LIVE on YouTube
Weekdays 7am-6pm ET
WATCH HERE: http://bit.ly/3vTiACF
Follow us on X: https://twitter.com/BloombergRadio
Subscribe to our Podcasts:
Bloomberg Daybreak: http://bit.ly/3DWYoAN
Bloomberg Surveillance: http://bit.ly/3OPtReI
Bloomberg Intelligence: http://bit.ly/3YrBfOi
Balance of Power: http://bit.ly/3OO8eLC
Bloomberg Businessweek: http://bit.ly/3IPl60i
Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:
Apple CarPlay: https://apple.co/486mghI
Android Auto: https://bit.ly/49benZy
Visit our YouTube channels:
Bloomberg Podcasts: https://www.youtube.com/bloombergpodcasts
Bloomberg Television: https://www.youtube.com/@markets
Bloomberg Originals: https://www.youtube.com/bloomberg
Quicktake: https://www.youtube.com/@BloombergQuicktake