In a rare show of agreement, two top officials at the Federal Reserve have expressed confidence that inflation will not pose a significant threat to the U.S. economy in the near future.
Fed Officials See Inflation Cooling
New York Fed President John Williams and Fed Governor Stephen Miran both believe that inflation will ease in the coming months.
Williams, a key ally of Fed Chair Jerome Powell and a long-time economist at the central bank, shares this view with Miran, who is a close adviser to President Donald Trump.
Miran, in a speech on Monday, dismissed official inflation statistics, claiming that “underlying” inflation is running below 2.3%, not far from the Fed’s 2% target. He attributed the official inflation rate of 2.8% to housing inflation still affected by the pandemic and the way statisticians measure financial advisory fees when the stock market rises.
Williams, in a separate speech on Monday, also expressed optimism about future inflation, stating that the impact of tariffs on prices has been “more muted and drawn out” than expected. He forecast that inflation would ease to just below 2.5% next year and fall to the Federal Reserve’s 2% target by 2027.
“I expect tariffs will have a largely one-off price level effect that will be fully realized in 2026,” stated Williams.
See Also: ‘Good Luck Blaming Biden,’ Says Fox News Host. ‘The Trump Team Knows The Economy Is Going Badly’
The Impact Of Further Fed Rate Cuts
The officials’ comments come amid the Fed’s ongoing struggle to strike a balance between inflation concerns and a sluggish labor market. The Fed cut interest rates by 25 basis points to 3.5%–3.75% in its December meeting, the third consecutive reduction. This move, despite elevated inflation, highlighted a growing internal dissent within the Fed.
Meanwhile, former Fed economist Claudia Sahm warned that further rate cuts could signal a troubled economy. She emphasized the need to focus on the underlying fragility of the job market that the Fed is striving to protect, cautioning that additional rate cuts could indicate a weak economy.
Economist Peter Schiff also criticized the Fed’s decision to cut interest rates and resume purchasing Treasury bills, warning that these measures could lead to a dangerous return to quantitative easing.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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