Federal Reserve Bank of New York President John Williams stated that high levels of uncertainty should prevent policymakers from offering any explicit guidance regarding the future path of interest rates, although he anticipates that rates will still be lowered over the long term.

"Given the changes that occur daily and weekly, it is not reasonable for us to try to provide clear guidance," Williams told reporters on the sidelines of an event in New York on Thursday. However, he added that once inflation begins to decline, there will be room to cut interest rates to ensure that monetary policy remains only moderately restrictive. He said, "As inflation falls back to 2%, we will need to lower nominal interest rates to prevent real rates from rising passively." Earlier, in a speech before his remarks to reporters, Williams indicated that monetary policy is currently in a good position to address the threat of prolonged supply shocks caused by war in the short term. He suggested that if energy supply disruptions ease quickly, the effects of the conflict could partially reverse this year. However, if the crisis persists longer, the impacts could be more severe. "This conflict could also represent a major supply shock with significant effects, pushing inflation higher—through intermediate costs and soaring commodity prices—while simultaneously restraining economic activity," Williams said. Williams noted that although underlying inflation is moving in the "right direction," the upward pressure on prices from the war has begun to appear in goods and services beyond just energy. "High energy prices are not only reflected in increased fuel costs but also translate into higher prices for airfare, groceries, fertilizer, and other consumer goods." Nevertheless, he added, "the current monetary policy stance remains in a good position to balance the risks to achieving our maximum employment and price stability goals." Several Federal Reserve officials have hinted that they favor holding interest rates steady when they meet in Washington from April 28 to April 29. Williams stated that he still expects the U.S. economy to grow by 2% to 2.5% this year, with the unemployment rate likely remaining between 4.25% and 4.5%. However, the labor market shows "conflicting signals," as hard data indicates a stable outlook, while soft data—such as the New York Fed's Survey of Consumer Expectations—suggests the job market will continue to gradually weaken. Williams forecasts that overall inflation will be between 2.75% and 3% by the end of this year, before declining to the 2% target by 2027. Williams also highlighted the cybersecurity risks that emerging AI technologies pose to the banking system and other businesses. He told reporters that policymakers are focused on ensuring "our cyber defenses continue to be effective." He pointed out that tools from Anthropic and other recent advancements indicate that the ability of artificial intelligence to identify and potentially exploit vulnerabilities in cybersecurity systems is "developing much faster than many expected." "This heightens concerns about cybersecurity, not just in the banking system but across our broader economy and the global economy," he said, describing the issue as "critically important" for central banks.