Fed’s Williams: Inflation to cool later this year and hit 2% in 2027

Federal Reserve Bank of New York President John Williams said late Monday that US monetary policy is now “well positioned” to  guide inflation back to target without harming jobs. Williams signaled no urgency to resume interest-rate cuts as the central bank moves closer to a neutral policy stance.

Key quotes

Expects unemployment rate to stabilize this year.

Expects active usage of Federal Reserve repo operations.

Economic outlook is quite favorable in 2026.

Federal Reserve policy decisions will be driven by incoming data. Tariff impacts should diminish in 2026.

Imperative to get inflation back to 2%.

Inflation to peak at 2.75 to 3 percent in first half of year.  

Tariff inflation largely borne by Americans.

Outside of tariffs, inflation trends mostly favorable.

Downside job risks increasing as inflation risks have diminished.

Inflation to cool later this year and hit 2% in 2027.

US likely to grow between 2.5% and 2.75% in 2026.

Market reaction

At the time of writing, the US Dollar Index (DXY) is trading around 98.90, down 0.24% on the day.