New York Fed President John Williams suggested that, should the economy evolve as anticipated, it would be prudent to “dial back the policy restraint gradually over time, starting this year.”

However, he was quick to stress the inherent uncertainty in the economic outlook, underscoring the need for Fed to maintain a data-dependent approach.

“The outlook ahead is uncertain, and we will need to remain data-dependent,” he said in a speech, adding “I will remain focused on the data, the economic outlook, and the risks as we evaluate the appropriate path for monetary policy to best achieve our goals.”

Williams also touched upon inflation, projecting a continued but gradual decline towards Fed’s 2% target. He cautioned, however, that this trajectory might not be smooth, referencing “bumps along the way” evidenced by some recent inflation data.

Fed kept monetary policy unchanged as expected. Federal funds rate is held at 0-0.25%. The target range will be maintained “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

The asset purchase pace is also held at at least USD 80B on treasury securities and USD 40B on MBS per month. Though, it added that “if progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.”

Full statement here.

New York Fed John Williams said in a forum yesterday that the Trump’s tariff war with other countries have “relatively small effect on the economy. But they created higher uncertainty for businesses.

Williams said “at least so far the tariffs that have been put in place, by the United States and other countries, when you roll that up into a $20-trillion economy it doesn’t have a big effect overall on economic growth or inflation”. And, the “much more important and larger” effect is higher uncertainty for businesses. As companies put off investments due to the uncertainties, “that’s a negative for jobs in the short run…and a factor that slows the economy relative to what it could be.”