Fed's Williams Calls Inflation Too High, Reaffirms 2 Percent Target
The New York Fed president's public statement signals the Federal Reserve has not shifted its inflation objective despite prolonged price pressures, a posture with direct implications for interest...
John Williams, president of the Federal Reserve Bank of New York, stated Friday that inflation in the United States remains above acceptable levels and that returning it to the Fed's 2 percent target is essential. "Inflation is absolutely too high. It's been too high for too long," Williams said at a European Central Bank conference held in Frankfurt, Germany, as reported by The Hill.
Williams is one of the most consequential voices within the Federal Reserve System. As president of the New York Fed, he holds a permanent voting seat on the Federal Open Market Committee (FOMC), the body that sets the federal funds rate. His public comments carry direct signal value for markets and policymakers monitoring the Fed's next rate decision.
The FOMC's most recent policy statement, published at its October 2026 meeting, maintained the federal funds rate target range at its current level. The Committee's stated long-run inflation goal remains 2 percent, as measured by the Personal Consumption Expenditures (PCE) price index, a figure established in the Fed's January 2012 longer-run goals statement and reaffirmed annually since.
The Bureau of Economic Analysis reported the most recent PCE inflation reading for September 2026. The core PCE index, which excludes food and energy, remained above the 2 percent target. The precise September figure is published in the BEA's Personal Income and Outlays release; the specific month-over-month and year-over-year numbers from that release would provide the exact measurement Williams was referencing.
Williams's remarks at the ECB conference are consistent with language he has used in prior public appearances throughout 2025 and 2026, during which he has repeatedly emphasized that the Fed's credibility depends on anchoring inflation expectations at 2 percent. Central bank credibility, in this context, refers to the degree to which households and businesses believe the Fed will follow through on its stated objectives, a factor that itself influences actual inflation outcomes.
The U.S. Economy has experienced multiple price shocks since 2021, including supply chain disruptions, elevated energy costs, and wage growth that outpaced pre-pandemic norms in several labor market sectors. Williams described these as "multiple price shocks" in his Friday remarks without specifying which current shocks he was referencing. The specific shocks he cited are not detailed in available reporting from the conference.
The Fed has raised the federal funds rate from near zero in early 2022 to its current range through a series of FOMC votes documented in publicly available meeting minutes on the Federal Reserve's website. The pace and direction of future adjustments remain subject to incoming economic data, including the Consumer Price Index (CPI) releases published monthly by the Bureau of Labor Statistics and the PCE releases from the BEA.
Congress has a formal role in Federal Reserve oversight. The Fed chairman is required to testify before the Senate Banking Committee and the House Financial Services Committee twice per year under the Full Employment and Balanced Growth Act of 1978, known as the Humphrey-Hawkins Act. Those testimonies are the primary legislative venue at which members of Congress can formally question Fed policy on the inflation target and rate decisions.
The October 2026 jobs report, which showed 165,000 payrolls added and unemployment at 4.1 percent, as covered by The Congressional Times in October 2026 Jobs Report: 165,000 Payrolls Added, Unemployment at 4.1%, provides relevant labor market context. The Fed considers both its inflation mandate and its maximum employment mandate when setting policy, meaning the jobs data and Williams's inflation remarks together frame the FOMC's near-term decision environment.
What remains unknown is the specific timeline Williams envisions for returning inflation to 2 percent, and whether he believes additional rate increases are warranted or whether the current rate level is sufficient to achieve disinflation. The full text of his remarks at the ECB conference, which would be published on the Federal Reserve Bank of New York's website, would provide a more complete account of his stated views on the rate path and his specific definition of which price shocks he considers most persistent.