Federal Reserve Bank of New York President Williams stated on Monday that the Fed's monetary policy is "well-positioned" to handle the high level of economic uncertainty stemming from the Middle East war.

In prepared remarks for a conference hosted by Cynosure Group in New York City, Williams noted, "The future is difficult to foresee, and risks to our dual mandate have increased on both sides."

He pointed out that "the extent and duration of impacts from supply disruptions caused by Middle East conflicts and rising energy prices are key factors shaping the global economic outlook."

Williams indicated that high inflation, mixed signals from the labor market, and uncertainties surrounding the war present "an unusual set of circumstances" for Fed policymakers. He did not provide guidance on the future path of the Fed's policy rate, which currently stands in the 3.50% to 3.75% range.

He stated that the U.S. economy is expected to remain resilient this year, with growth projected between 2% and 2.25%, while the labor market remains generally stable with unemployment likely staying between 4.25% and 4.50%.

However, Williams noted that inflation may remain around 3% this year, driven by tariffs and energy costs, before eventually declining to the Fed's 2% target. He added that inflation expectations remain generally stable but warned that energy price increases could be more severe than anticipated.

"Market expectations for future oil price movements are relatively moderate, but under several plausible scenarios, more significant imbalances in both prices and supply quantities could occur," Williams said. He further noted that the Iran conflict "could trigger broader, more impactful supply shocks, leading to more severe adverse consequences for inflation and economic activity."

These remarks represent Williams' first public comments since the Fed decided to maintain interest rates unchanged last week. Amid high uncertainty from the war, Fed policymakers remain in a wait-and-see mode.

Related conflicts, particularly the closure of the critical Strait of Hormuz, have significantly driven up energy prices. Fed officials are facing prospects of rising inflationary pressures while energy price spikes could simultaneously suppress demand and pose risks to the labor market.

In last week's rate decision, three regional Fed presidents supported maintaining rates but opposed keeping language in the monetary policy statement that suggested the next move would be a rate cut.