The Federal Reserve is seen to be getting closer to the point where it could start cutting interest rates but does not have enough data ahead of its July meeting to confirm inflation is on a sustainable path back to 2%, New York Fed President John Williams said in an interview published on Wednesday.
The US central bank is expected to keep the benchmark rate in the 5.25%-5.5% range, where it has been for the past year, at its July 30-31 meeting, but markets are counting on a possible cut in September.
A growing number of Fed policymakers have indicated they are increasingly confident that inflation is firmly on its way back to the Fed's target, after a higher-than-expected reading earlier in the year.
Based on the Fed's preferred measure, inflation in May was at an annual rate of 2.6%, down from a peak of 7.1% reached during the COVID-19 pandemic. June data will be released on July 26.
Fed Chairman Jerome Powell on Monday also said that inflation readings throughout the second quarter of the year "add some confidence" to the downward spiral, suggesting that the start of an easing cycle may not be far away.
Fed Williams almost ruled out a possible rate cut in July. "We will actually know more between July and September. We will get two months of inflation data," he said.
Williams also dismissed concerns that bringing inflation back to the Federal Reserve's 2% goal will be more difficult than bringing it down from its peak to current levels.
