Fed Williams continues to discover multiple ways to say no rate cut this month, clever boy

Summary:

• Williams highlights resilience of New York and US economy

• Reaffirms dollar’s role as global reserve currency

• Says global finance requires some coordination

• Defends Fed’s rate-control and reserve framework

• Confident inflation can return to 2%

Federal Reserve Bank of New York President John Williams struck an upbeat tone on the strength of the U.S. economy and the global financial system on Monday, reaffirming confidence in the Federal Reserve’s policy framework and its ability to return inflation to target, in further Q&A comments.

Williams had spoken earlier:

Speaking in a wide-ranging discussion, Williams said New York City has “largely recovered” from the pandemic and remains strong and vibrant, underscoring resilience in the U.S.’s largest financial hub. He said broader U.S. economic and financial conditions continue to provide a solid foundation at a time of heightened global uncertainty.

Williams emphasised the central role of the United States dollar, describing it as the world’s reserve currency and highlighting the importance of the U.S. financial system to global stability. He said the interconnected nature of modern finance means some level of international coordination remains necessary, particularly during periods of stress.

While acknowledging demographic challenges facing advanced economies globally, Williams argued these structural shifts are being managed within a robust institutional framework. He reiterated that the U.S. financial system remains “incredibly important” to the world economy, reinforcing confidence among global investors despite political and geopolitical noise.

On monetary operations, Williams defended the Fed’s current framework, saying the system of paying interest on reserves works well and is beneficial for the economy. He added that the Fed’s existing rate-control mechanism continues to function effectively, allowing policymakers to steer financial conditions with precision.

Williams also pushed back against doubts about the inflation outlook, saying it is “totally realistic” for the Fed to bring inflation back to its 2% target. His comments reinforce recent messaging from senior officials that policy is now near neutral and well positioned to guide inflation lower without destabilising growth or employment. He added that strong productivity growth ‘echoes’ past booms

Taken together, the remarks underline the Fed’s confidence not just in the near-term economic outlook, but in the durability of the institutional and financial architecture underpinning U.S. monetary policy.