By Matt Grossman

NEW YORK--New York Fed President John Williams said Thursday that the Fed's current interest-rate setting is calibrated well for an economy that is facing additional risks from the conflict in the Middle East.

Speaking in Midtown Manhattan on Thursday morning, Williams said the Iran war has presented the economy with new and unpredictable challenges. Its effects could resolve later this year if supply disruptions in the energy market resolve relatively soon, Williams said. But he also warned that the conflict could lead to a more difficult dynamic in which prices are rising at the same time that the economy is slowing.

"This has begun to play out already," Williams said.

With interest rates at 3.5% to 3.75%, the Fed's current policy setting is in the right place to address dueling risks to the central bank's two aims of keeping unemployment in check and inflation under control, Williams said.

"The current stance of monetary policy is well positioned to balance the risks to our maximum employment and price stability goals," he said.

The Fed has held interest rates steady so far this year, and officials have signaled they plan to keep rates on pause again at the next policy meeting in two weeks.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

April 16, 2026 08:35 ET (12:35 GMT)

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