(July 17): Federal Reserve (Fed) Bank of New York President John Williams said inflation data over recent months has been encouraging, but wants to see more evidence in the coming months to gain the confidence needed to lower borrowing costs.

Williams said the central bank will learn “a lot” between July and September, a month when policymakers are widely expected to reduce interest rates.

The New York Fed chief’s comments, along with those made by Chair Jerome Powell and other policymakers in recent days, suggest the central bank is moving closer to cutting rates but is not ready to do so quite yet.

Readings from the last three months are “getting us closer to a disinflationary trend that we’re looking for”, he said in an interview with the Wall Street Journal published Wednesday. “These are positive signs. I would like to see more data to gain further confidence inflation is moving sustainably to our 2% goal.” The interview was conducted on Tuesday.

Policymakers will meet next on July 30-31, but investors are betting they won’t begin rate reductions until their September gathering.

Trump warning

Such a move would likely earn the ire of former president Donald Trump. The Republican nominee told Bloomberg Businessweek in an interview that the Fed should not cut rates before the US November election.

Williams echoed Powell by noting the importance of balancing the risks of holding rates too high for too long, which could hurt jobs, versus cutting prematurely and stalling progress on curbing price pressures.

“We’re actually going to learn a lot between July and September,” Williams said. “Both of our dual mandate goals are very much in the forefront of my thinking about policy decisions, but it is absolutely essential that we could achieve this goal of getting inflation back to 2%.”

US central bankers said in June that they were waiting for “greater confidence” that inflation was decelerating sustainably toward their 2% target before lowering their policy rate, which they’ve held at a more than two-decade high for about a year. Recent data has shown a renewed easing in price pressures, with a key gauge of consumer prices posting the smallest advance since 2021 in June.

“I feel like the stance of policy right now is working well,” Williams said. “If we get more data like this, I think that I would find myself finding that greater confidence” that inflation is moving sustainably to 2%.

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