Federal Reserve Bank of New York President John Williams expects inflation to average around 2.75% this year as rising oil and gas prices contribute to higher prices. That supports the Fed maintaining rates between 3.50% and 3.75%, he told Bloomberg on Tuesday.
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Williams Sees Core Inflation Inching Higher, Cuts 2026 GDP Forecast
At the same time, he believes that core inflation, which excludes volatile food and energy prices, will only increase by 0.1% or 0.2% from current levels. “The story hasn’t changed very much,” he said.
However, Williams lowered his 2026 U.S. gross domestic product (GDP) forecast to between 2% and 2.5% from between 2.5% and 2.75%.
The Fed will meet on April 29 for its next interest rate decision, where it is widely expected to hold rates steady. Rates are expected to remain unchanged through year-end with 79.1% odds, according to the CME FedWatch tool.