Federal Reserve's latest statement: Economic resilience supports prolonged high interest rates, but no need for further rate hikes

Forex Network, June 26 —— On June 25 local time, John C. Williams, President of the New York Federal Reserve Bank and a permanent FOMC voting member, released his latest monetary policy statement.

This statement was prepared for the Kran Currency Fund Seminar and released officially on schedule. It also marks the first systematic policy stance from a key Fed official following the June FOMC meeting, clarifying the current status of the US economy, the logic behind easing inflation, and the operation framework for monetary policy, thus providing important guidance for market interest rate expectations.

John C. Williams, currently serving as the President of the New York Federal Reserve Bank, is a core decision-maker within the Federal Reserve system, often referred to as the Fed's number three, ranking just after the Fed Chair and Vice Chair.

The Resilience of the US Economy and a Robust Labor Market

Facing global supply chain and commodity risks due to geopolitical tensions in the Middle East, the US economy has shown strong resilience and has fully absorbed external shocks.

Currently, US consumer spending remains solid, corporate investment is growing robustly, and particularly, the investment boom in artificial intelligence has become a core driver underpinning economic growth, helping the economy operate steadily amid uncertainty.

Core Drivers of High Inflation

Inflation continues to be the central constraint for current monetary policy, with US inflation still significantly above the Fed's long-term target of 2%.

The current round of high inflation is mainly driven by three factors: with multiple factors jointly pushing up domestic price levels.

Though inflation remains elevated, Williams clearly presented

Lengthy Disinflation Cycle Carries Risks, but Rates Are Appropriate for Now

Medium- to long-term inflation expectations in the market remain well anchored and there is no sign of panic overrun.

According to data from the New York Fed,
According to Fed projections, US inflation is expected to drop to 3.5% by the end of this year, steadily approach the 2% target by 2027, and formally reach the policy goal in 2028, making the inflation recovery a long and gradual process.

Based on current economic fundamentals, the Fed decided at its June rate-setting meeting to keep the benchmark rate range unchanged at 3.5%–3.75%

At the same time

The Federal Reserve's Monetary Policy Operating Framework

This speech detailed the Fed's mature monetary policy operational framework as it stands today.



Since predicting liquidity withdrawal risk during last year's tax season, the Fed launched monthly $40 billion Treasury purchases; later, as markets stabilized, it tapered the buying down to $25 billion, and then $10 billion, flexibly maintaining ample market liquidity and efficient policy transmission.

Overall Policy Tone and Key Tracking Indicators

Overall, the Fed's policy approach is clear: maintaining the dual mandate of "controlling inflation and supporting employment," and, as long as inflation has not sustainably and firmly returned to the 2% target, policy remains steady with no scope for easing.



The current rate range matches the state of the US economy and can steadily suppress inflation. With the cooling path for inflation now clear,



Key metrics to monitor going forward: core PCE inflation, housing and rental data, nonfarm payroll wage growth, international energy prices, Middle East supply chain risks, and AI investment enthusiasm. These indicators will directly determine the Fed's pace and timing of minor rate adjustments—a factor that also supports long-duration assets like gold.