New York Fed president John Williams said Thursday that he expects inflation to start coming down again in the second half of the year and once again reiterated the central bank won't lower rates until it sees further progress on that front.
"I see some of the recent inflation readings as representing mostly a reversal of the unusually low readings of the second half of last year, rather than a break in the overall downward direction of inflation," Williams said in a speech at the Economic Club of New York.
"With the economy coming into better balance over time and the disinflation taking place in other economies reducing global inflationary pressures, I expect inflation to resume moderating in the second half of this year," he added.
Williams underscored language used in the Fed’s last policy statement stating that it doesn’t "expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."
The Fed decided on May 1 to keep its benchmark interest rate in a range of 5.25%-5.50% as it tries to get inflation down to its goal of 2%.
Many Fed officials in the weeks since that last meeting have stressed a stance of holding rates steady for longer as they evaluate the path of inflation.
Minutes from that May 1 meeting released last week indicated some policymakers discussed their willingness to raise rates if needed.
Williams on Thursday appeared to throw some cold water on the notion that a rate hike could be in the cards, something he’s stressed in recent weeks isn’t what he expects.
He said in his speech that the behavior of the economy over the past year offers "ample evidence that monetary policy is restrictive in a way that helps us achieve our goals."
Williams sees inflation ending the year at 2.5%, which would be two-tenths of a percent lower than where inflation currently sits at 2.7% as measured by the Fed’s preferred inflation gauge — the "core" Personal Consumption Expenditures index.
A fresh reading on that gauge from April will be released Friday. Economists expect core PCE showed no progress in April, holding the level of 2.7% year over year seen in March.
Williams pointed out that the job market remains strong and that wage growth has yet to fully return to levels consistent with 2% price inflation on a sustained basis.
He sees the unemployment rate ending the year at about 4% and then moving gradually down to 3.75%. The unemployment rate stands at 3.9% and is expected to hold that level when the May jobs report is released next Friday.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance