Fed's Williams: Tariffs may be adding a quarter of a percentage point to inflation right now

Federal Reserve (Fed) Bank of New York President John Williams predicted slightly higher inflation and unemployment through the rest of the year on Tuesday, as well as slower-than-expected growth metrics. As the head of the New York Fed, Williams is a permanent voting member of the Federal Open Market Committee (FOMC) and holds significant sway over Fed policy decisions.

Key highlights

It's appropriate to maintain current policy stance.
The economy remains in a good place.
Firms are passing tariff costs to customers.
I expect real GDP growth to slow to about 1% this year.
Uncertainty around inflation and immigration is elevated.
There are signs inflation is affecting some categories of goods.
Modestly restrictive monetary policy gives space to examine new data.
US economy in good place, job market is still solid.
Uncertainty, tariffs, and reduced immigration will slow the economy.
Unemployment rate to rise to around 4.5% by year’s end.
Tariffs will boost inflation to 3% this year.
Expects inflation to gradually decline to 2% over next two years.
Flags weak soft data versus more resilient hard data.
The economy will grow at a slower pace this year, and the job market is to stay solid.
Tariffs may be adding a quarter of a percentage point to inflation right now.