Fed’s John Williams says inflation is easing as tariff effects move into the rearview mirror

John Williams, who leads the Federal Reserve Bank of New York and holds a permanent voting seat on the Federal Open Market Committee, said in a CNBC interview that recent data has been “encouraging” and that inflation is “moving slowly down as some of the effects of the tariffs move into the rearview mirror.” With the FOMC’s next meeting set for September 15-16, the comments land at a moment when traders are trying to decode whether the Fed will push rates higher from the current 3.5%-3.75% target range or hold steady. The tariff tax is fading Williams’ core argument is straightforward. Inflation, currently running somewhere in the range of 2.75% to 3%, has been elevated largely because of tariffs and geopolitical disruption, particularly the ongoing conflict in the Middle East involving Iran. Those are supply-side shocks, not demand-driven overheating. The key detail that matters most: higher energy prices stemming from the Middle East crisis have not meaningfully bled into service-sector prices. In economics jargon, there are no significant “second-round effects.” In plain terms, gas got more expensive, but your haircut and your accountant haven’t jacked up their prices in respon...