New York Fed President John Williams stated that while inflation is currently “unquestionably too high” at about 4%, there are reasons to believe it may have crested and should soon start subsiding. Williams pointed to higher tariffs, supply chain disruptions, and energy price spikes as the main forces driving inflation higher in the last year.
Reasons for Optimism
Williams laid out several reasons for his optimism, including expectations that tariff-related price increases have largely played out, shelter inflation should remain on a downward trajectory, oil prices have likely peaked, and supply-demand imbalances from the AI build-out should recede. He also noted that the labor market is not adding to inflation pressures and that inflation expectations remain well anchored.
Williams expects overall inflation to decline to around 3.25% by year-end, then continue on a glide path toward the Federal Reserve’s 2% goal in 2027 and land on target in 2028. He also said the job market appeared to have stabilized and he expected the unemployment rate to gradually descend to 4% in 2028 from the current 4.2%.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
