John Williams, President of the Federal Reserve Bank of New York, took the stage at the Macroeconometric Conference in the Bahamas to share insights on the state of the US economy. Curiously, he delivered the message that even the central bank is not fully confident in what is really happening.
John Williams began on a positive note: the US economy entered 2025 surprisingly strong and optimistic. The labor market is thriving, GDP is growing, and Americans are employed. What more could one ask for? But then came the caveat: while everything seems stable, macroeconomic data is so contradictory that it is nearly impossible to tell where the economy is actually heading.
Inflation, of course, adds fuel to the fire. The annual CPI slid from a worrying 7% in 2022 to a much more manageable 2.5%. Still, as Williams noted, inflation has not reached the “ideal” 2% target.
He also pointed out that inflation is no longer just a national issue — it has gone global. “It’s practically on an international tour, jumping from one country to another,” he joked. To make sense of this phenomenon, the New York Federal Reserve has developed a special model called Global MCT, which tracks inflation trends across seven countries and tries to read its trajectory.
Inflation expectations were another focus of Williams' remarks. The key is to ensure that households and businesses stay calm and maintain their trust that inflation remains under control. Short-term expectations have ticked up slightly, but long-term forecasts are holding steady. The underlying message from Williams is not to panic too soon.
There were no surprises at the FOMC policy meeting in March. The rate-setting committee kept the federal funds rate at 4.25 to 4.5% and slowed the pace of balance sheet reduction. But Williams was quick to clarify: this is not a policy shift, just a quiet signal that for now, it is best to hold steady and wait.
