New York Fed's John Williams backs pause, says it is time to gather more data

What Williams said and where he said it

Speaking in Frankfurt at a European Central Bank event on Friday, John Williams endorsed the central bank's stance that this period should be used to gather more information on risks to prices. He described inflation as "absolutely too high," while saying other indicators are not, so far, signaling trouble.

He emphasized that policy has a "critical role" in stopping unusual relative price moves from spreading into broader or longer lasting inflation. He also noted that "inflation expectations remain well anchored" and that "we're seeing wage growth be consistent with our 2% goal."

Williams pointed to the latest policy statement as the right framing, saying, "Our FOMC statement last meeting, I think, captures correctly that this is an appropriate time to accumulate more information to help us determine what the appropriate stance of policy is to make make sure we achieve a timely return to our 2% target."

Recent decisions and the backdrop

Officials maintained rates last month in a 10-2 decision, following a unanimous move in September that raised the benchmark by 25 basis points to a 3.75% to 4% range. Since then, a number of policymakers have said more rate increases are warranted, while urging a measured pace. Those remarks came after Chairman Kevin Warsh said the economy was strong and cautioned about persistent inflation, while still refraining from giving his own rate outlook.

The Fed's preferred inflation gauge, the personal consumption expenditures price index, recorded a 3.6% increase in September relative to the same month a year earlier, and measures that strip out food and energy also increased. Data indicated the US economy grew at its fastest rate in a year during the quarter ending September. Williams also flagged "a very unusual set of relative price shocks" and "very strong resilience" in the US economy through those shocks.

Markets respond to new information, and investors benefit from thoughtful interpretation. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

A second Fed voice on AI and policy timing

In separate remarks Friday, St. Louis Fed President Alberto Musalem said officials should watch the risk that constructing artificial intelligence infrastructure could push inflation higher in the near term. "When I look at inflation, excess inflation today, it's coming both from negative supply shocks related to the Middle East and demand forces coming related to the AI build," he said.

He added that while AI could lift productivity down the road, the Fed cannot wait for those gains. "We need to make monetary policy for the economy of the day," he said. "We cannot make monetary policy for the economy as it may be five years from now."

Why it matters for your portfolio

The bottom line: officials have paused to evaluate unusual price shocks, steady inflation expectations and solid growth before choosing the next step. With core pressures still firm and AI related demand in the mix, the path of rates depends on incoming data rather than the calendar.

Smart tools and steady judgement help investors keep perspective through changing signals. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.