Fed’s Williams says inflation is too high but will start coming down soon

NEW YORK — New York Federal Reserve President John Williams on Thursday said inflation is still too high but he is confident it will start decelerating later this year.

With markets on edge over the direction of monetary policy, Williams offered no clear signs on where he is leaning as far as possible interest rate cuts go. Instead, he reiterated recent positions from the central bank that it has seen a “lack of further progress” toward its goals as inflation readings have been mostly higher than expected this year.

“With the economy coming into better balance over time and the disinflation taking place in other economies reducing global inflationary pressures, I expect inflation to resume moderating in the second half of this year,” Williams said in remarks at the Economic Club of New York. “But let me be clear: Inflation is still above our 2% longer-run target, and I am very focused on ensuring we achieve both of our dual mandate goals.”

For nearly a year, the Fed has been in a holding pattern, keeping its benchmark borrowing rate in a range between 5.25%-5.5%, the highest in more than 23 years.

Williams called policy “well positioned” as the Fed seeks to keep the labor market strong and bring inflation back to its 2% target. Most inflation indicators are near 3% now; a key reading from the Commerce Department is due Friday.

Inflation as measured through the Fed’s preferred yardstick — the personal consumption expenditures price index — is expected to come in at 2.7% for April, according to the Dow Jones estimate. Williams said he expects PCE inflation to drift down to 2.5% this year on its way back to 2%.

“We have seen a great deal of progress toward our goals over the past two years. I am confident that we will restore price stability and set the stage for sustained economic prosperity. We are committed to getting the job done,” he said.