Investing.com - The latest consumer inflation data has been broadly well received by financial markets, but Federal Reserve Bank of New York President John Williams said this news, while positive, is not sufficient for the U.S. central bank to cut interest rates sometime soon.
Data released on Wednesday showed that U.S. consumer price growth had slowed as anticipated to 3.4% on an annualized basis in April, while so-called ‘core’ CPI, which excludes volatile energy and food prices, increased 3.6% annually, the smallest year-on-year gain since April 2021.
The softer inflation tone is "kind of a positive development after a few months where the data were disappointing," Williams said in an interview with Reuters on Wednesday, and "the overall trend looks reasonably good."
However, he is still not sufficiently confident that price pressures are moving sustainably to the Fed's 2% inflation target before lowering short-term borrowing costs.
Monetary policy is "restrictive" and "is in a good place," Williams said. "I don't see any indicators now telling me ... there's a reason to change the stance of monetary policy now, and I don't expect that, I don't expect to get that greater confidence that we need to see on inflation progress towards a 2% goal in the very near term."
Still, Williams also stated that he couldn’t see “any need to tighten monetary policy today," largely ending any speculation that the Fed might need to raise rates further to reduce inflation to desired levels.
Williams is one of the most respected voices at the central bank, and also serves as vice-chairman of the rate-setting Federal Open Market Committee.
He had said earlier this month that the U.S. central bank will lower its interest rate target at some undefined point.
"Eventually we'll have rate cuts" but for now monetary policy is in a "very good place," Williams said in comments made before the Milken Institute 2024 Global Conference in Beverly Hills, California.
The Federal Open Market Committee maintained the overnight target at between 5.25% and 5.5% at its last meeting at the start of this month.