Federal Reserve officials struck a cautious tone on monetary policy, signaling that the central bank is not ready to ease rates quickly as inflation remains above its 2% target.
New York Fed President John Williams said the U.S. economy remains strong and could be gaining momentum. He expects GDP growth of around 2.25% this year and sees inflation at roughly 3.5%, with the Fed’s 2% inflation target potentially reached in 2028.
Williams also said there is no need for urgency following the September rate hike, while noting that another rate increase could be likely this year if the economy performs as expected.
Meanwhile, Fed officials emphasized the need for more evidence that inflation is moving sustainably lower. St. Louis Fed President Alberto Musalem said policymakers cannot justify easier policy simply on expectations that artificial intelligence will eventually boost productivity.
Chicago Fed President Austan Goolsbee also warned that large federal budget deficits can act as fiscal stimulus and potentially add pressure to an already-strong economy.
Overall, the comments suggest the Fed remains focused on preventing inflation from becoming entrenched, with future rate decisions likely to depend heavily on incoming economic data.
