Williams did a fairly big 180 in supporting a December rate cut and these are his first comments since the decision.
Looking ahead, his comments are generally neutral and wait-and-see tone regarding the path forward for rates. He downplays the rise in unemployment as “distortions” but also suggests the soft CPI data had “distortions” as well.
The ‘sense of urgency’ line is notable but it certainly doesn’t rule out January, which is priced at about 25%.
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Feels pretty good about economy next year
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2025 GDP likely around 1-1.5%
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2026 GDP seen at around 2.25%
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Policy mildly restrictive, has some room to get back to neutral
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With inflation above target mildly restrictive monetary policy is helpful
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Fed policy is ‘mildly restrictive,’ has some room to get back to neutral
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Key goal of monetary policy is about helping job market
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Doesn’t have a ‘sense of urgency’ on changing monetary policy
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Monetary policy is well positioned to gather more information
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The data is broadly consistent with recent trends and recent Fed cut
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Jobs data does not show sharp deterioration in hiring market
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Unemployemnt rate may have been pushed up by distortions, but not a surprising read
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New jobs data shows steady private sector job gains
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CPI data may have been pushed down a bit
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CPI data had some distortions, will need more data to get good read on inflation
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Some of the new data has been encouraging and shows more disinflation
Williams is a permanent voter.
