Fed's Williams: Economy is going through an adjustment process

In an interview with CNBC on Wednesday, Federal Reserve Bank of New York President John Williams said that he expects the Gross Domestic Product growth will continue to slow, per Reuters.

Key takeaways

"Economy is going through an adjustment process."

"Expect on the whole GDP will grow 1% to 1.5% on the year."

"Still think the labor market is solid."

"Unemployment rate is low, but hiring has slowed."

"Weaker job growth tied to both slowing demand and slowing supply growth."

"Breakeven rate of job growth is hard to estimate."

"Wage growth continues to be consistent with a solid labor market and inflation moderating towards 2% target."

"Progress on inflation is very slow now, hard to separate out tariff impact."

"Watching services inflation carefully."

"Perhaps four or five tenths of a percentage point on core PCE is due to higher tariffs."

"If the economy evolves as expected at some point interest rates need to be closer to neutral."

"Policy still modestly restrictive, inflation gradually coming down."

"Fed has to be driven by the data."

"Risks to jobs and inflation are moving closer to balance."

"Do not want the labor market to weaken too much, but want inflation back to 2%."

Market reaction

These comments received a neutral score of 5.2 from FXStreet Fed Speech Tracker. In turn, the FXStreet Fed Sentiment Index stays near 104, reaffirming the neutral stance.

The US Dollar (USD) preserves its strength following these comments. At the time of press, the USD Index was up 0.4% on the day at 98.60.