In light of the latest Producer Price Index (PPI) data in the USA, FED official John Williams made a series of statements regarding the economic outlook and the FED's future actions.
While US Initial Unemployment Claims were announced as 211 thousand, it was below the expectation of 216 thousand and the previous figure of 222 thousand. Core PPI (Annual) for March was 2.4%, slightly above the expectation of 2.3% and significantly above the previous level of 2.0%. Overall US PPI (Annual) for March was 2.1%, below the expectation of 2.2% but above the previous value of 1.6%.
Williams emphasized that the outlook is uncertain and the FED should be dependent on data. Williams also announced that the FED will reduce interest rates starting this year, which indicates a change in monetary policy.
Williams stated that the FED has made 'significant progress' in reducing inflation. He also said evidence shows reserve levels remain abundant, which could influence the Fed's decisions on interest rates.
Williams stated that despite the uncertainty, the job market remains strong. The Fed official expects US GDP to reach 2% this year and is focused on bringing inflation back to 2%.
Looking forward, Williams expects the unemployment rate to rise to 4% this year. He predicts that inflation will be at 2.25-2.5% this year. According to Williams, the risks between inflation and unemployment are moving towards a better balance.
*This is not investment advice.