Fed official delays inflation target after May PCE gauge hits 4.1%, citing persistent price pressures and geopolitical risks.
New York Fed President John Williams said the central bank’s 2% inflation target will likely not be met until 2028, a year later than previously forecast. The delay reflects elevated price pressures, with the Fed’s preferred PCE index rising 4.1% year-over-year in May.
Williams described current policy as well positioned but warned inflation remains stubbornly high. He projected inflation cooling to around 3.5% by year-end, still above the Fed’s goal. Middle East conflict risks were cited as a key swing factor for commodity prices and inflation timelines.
Markets expecting near-term rate cuts face pushback, as the Fed signals a higher-for-longer stance. The standing repo facility remains active to manage liquidity while rates hold steady.