Three Officials Speak Out: Is the US Fed Ready to "Sit Back and Do Nothing" Until September?

John Williams, president of the Federal Reserve Bank of New York, stated that amid an uncertain economic outlook, monetary policy decision-makers may not be ready to lower interest rates before September.

On Monday (May 19) local time, Williams said, "We are unlikely to figure things out in June or July. It will be a process of continuously collecting data, gradually clarifying the situation, and observing trends."

The US Fed's next three meetings will be held in June, July, and September. According to federal funds futures pricing, the market currently expects two 25-basis-point interest rate cuts this year, down from the four expected at the end of April.

This is because the probabilities of a recession and an interest rate cut have both decreased after Trump paused the reciprocal tariffs for 90 days. Currently, the CME Group's "FedWatch" tool shows that the probability of a rate cut in June is less than 10%, and the probability of action before July is slightly over 33%.

Williams emphasized that uncertainty not only plagues policymakers but also makes it difficult for businesses and households to gauge how a series of policies from the Trump administration, including tariffs, will reshape the US economy. Like many of his colleagues, Williams said the Fed can afford to wait patiently for new data.

Williams pointed out that while inflation is pulling back and the economy is near full employment, he is closely monitoring loan defaults and consumers' willingness to spend. He also said that the current monetary policy is "slightly restrictive" and in a "good place."

Earlier in the day, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, also expressed a similar stance, indicating no intention to adjust interest rates in the short term.

"The economy is in great flux, policies are constantly changing, and uncertainty is high. I think we need to wait three to six months to see how things unfold," Bostic said.

Bostic said he is particularly concerned about inflation and the public's expectations for future price increases. "Given our dual mandate, I am more worried about inflation, especially because we have seen worrisome changes in inflation expectations."

Shortly before the article was published, Federal Reserve Vice Chair Philip Jefferson also emphasized a "wait-and-see" stance. He said the Fed must ensure that price increases do not evolve into persistent inflation.