Fed takes cautious approach to monetary policy amid economic uncertainty

The US central bank's current monetary policy course has been correctly chosen, said John Williams, president of the Federal Reserve Bank of New York. According to him, at the moment there is no urgent need to make changes in interest rates.

‘Moderately restrictive’ monetary policy, as Williams noted, is appropriate given the robust labor market and inflation, which is still slightly above the 2% target.

As Williams told reporters after his formal speech, the Fed will eventually need to lower interest rates to the so-called neutral level. In the meantime, he said, the risk of slower economic growth and higher inflation is elevated, given the government's volatile and unpredictable policies.

This view is supported by Chicago Fed president Austan Goolsbee. The official intends to monitor how import tariffs will affect consumer prices. As Reuters reports, citing the opinions of experts, Trump's trade policy will aggravate the already difficult situation with inflation in the country.

Last week, the Fed left interest rates unchanged at 4.25–4.50%. Officials also signaled possible cuts this year, while acknowledging the uncertainty of this outlook.