Fed's Williams: Tariffs Likely to Increase Inflation and Slow Economic Growth

According to Odaily, Federal Reserve official John Williams has indicated that tariffs are expected to raise inflation and hinder economic growth. He emphasized that the Fed's current monetary policy is optimally positioned to manage these risks. Williams noted that during uncertain times, consumers might delay significant decisions such as purchasing homes or cars, and businesses might postpone investments until they have a clearer outlook on the future. This reduction in spending by households and businesses can lead to slower economic growth. Williams highlighted that, given February's data showing inflation remains above target, it is appropriate for the Fed to maintain interest rates at a level that moderately restrains the economy. He stated, "The current moderately tight monetary policy stance is entirely appropriate." Furthermore, Williams stressed the importance of maintaining good long-term inflation expectations during periods of turbulence and uncertainty to ensure price stability. He remarked that maintaining inflation expectations is crucial as the Fed pursues its goals of maximum employment and returning inflation to the long-term target of 2%.