By Michael S. Derby
NEW YORK (Reuters) – Federal Reserve Bank of New York President John Williams said on Friday that so far there’s no evidence that inflation expectations are starting to run into any form of trouble.
Based on recent data, “there is no sign of inflation expectations becoming unmoored at any forecast horizon relative to the pre-pandemic period,” Williams said in the text of remarks to be presented at the U.S. Monetary Policy Forum in New York.
Williams, who spoke earlier this week in comments that highlighted no near-term need to change the current setting of monetary policy in an environment where trade tariffs may add to future inflation, did not comment on the monetary policy and economic outlook. His comments came in reference to a paper presented at the conference.
Looking at the data, “a striking feature of these expectations is that they have fully returned to levels that prevailed between mid-2013 and mid-2016, before inflation expectations drifted downward during the extended low inflation experience prior to the pandemic.”
Fed officials believe the projected path of inflation exerts a strong influence on where current levels of price pressures stand. Some recent data has been pointing to a rise in expected inflation amid the Trump administration’s efforts to impose huge tariffs — those are import taxes that will largely be paid by Americans — that most economists expect will push inflation higher. That said, expected inflation tracked by the New York Fed has thus far been muted.
(Reporting by Michael S. Derby; Editing by Andrea Ricci)
