With economic risks mounting and inflation still above target, the Federal Reserve sees no urgency to change interest rates. New York Fed President John Williams, speaking in the Bahamas, called the current policy stance “modestly restrictive” and appropriate for now, given the strong job market and ongoing price pressures. Williams noted that rate cuts may be necessary in the future but emphasized the need to wait for more data before taking any action, particularly given the uncertainty caused by changing government policies.Chicago Fed President Austan Goolsbee echoed this caution, warning that President Donald Trump’s tariffs could fuel inflation and complicate the outlook. Meanwhile, the Fed is also slowing the pace of its balance sheet reduction, having already trimmed over $2 trillion in holdings. Williams described this as a “natural next step” to ease pressure on money markets and manage government financing needs, underscoring the Fed’s careful balancing act in an unpredictable economic landscape.
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