Fed's Williams: Tariffs will boost inflation to 3.5-4% this year

Federal Reserve (Fed) Bank of New York President John Williams noted on Friday that he overwhelmingly anticipates a general weakening in US economic data as tariffs continue to take root.

Key highlights

Tariffs will boost inflation to between 3.5% to 4% this year.

The economy is beset by very high levels of uncertainty.

Tariffs and trade key drivers of huge uncertainty.

Modestly restrictive monetary policy is totally appropriate.

Fed policy is well positioned for what lies ahead.

Current US monetary policy allows the central bank space to react.

I remain fully committed to getting inflation back to 2%.

Longer-term inflation expectations are anchored, we must maintain that.

I expect growth to slow considerably to 1% this year.

There's an unusually wide array of outcomes that lie ahead for the economy.

The economy started the year on solid footing.

I see the jobless rate rising to between 4.5%-5% this year.

The key question is if higher inflation spills into 2026.

There is still quite a bit of uncertainty about tariffs, but there are more details.

How other countries respond to tariffs is a big issue.

The key is not to overreact to any one point of data.

The soft data has weakened a lot, but hard data has held in so far.

Survey data has weakened, spending data has held up.

Current economy is not in stagflation. This isn't the 1970s.

The economy is not having stagflation, but new government policies are having a big impact.

The best answer to stagflation risk is to achieve Fed's goals.

Inflation expectations are anchored.