Fed’s Williams sees inflation cooling and interest rates falling further

In a Barron’s interview published on Thursday, New York Federal Reserve Bank (Fed) President John Williams said that he “sees inflation cooling and interest rates falling further.”

He further noted that “2% is the rate that can best balance the central bank’s employment and price stability goals.”

Additional comments

Labor market is now in balance, not providing upward pressure on inflation.

Wants to see inflation coming down to 2% and staying around that level amid solid labour market.

Don't see any signs of a recession in the data.

It is pretty clear that monetary policy is restrictive today.

That is why it is "very appropriate" to cut rates in the past two meetings.

We're well positioned for risks of inflation being higher than we expect for next year.

Expects it to be appropriate to cut rates further to more normal or neutral levels over time.

Market reaction

The US Dollar Index is testing intraday lows on these comments, down 0.17% on the day to trade near 106.50.