In a recent address, Federal Reserve member Williams underscored the critical role of economic data in determining future monetary policy decisions. As Fed Chair Powell considers rate cuts in light of favorable economic indicators, the impact of upcoming employment data will be significant. However, recent declines in Bitcoin prices may partially be attributed to concerns stemming from Cook’s dismissal. Williams advocates for interest rate reductions without being deterred by trade and tariff issues. 3 major labor market cooling reports released this week confirm his stance with two more expected tomorrow. If these align, a potential rate reduction from the Fed could follow. Key highlights from Williams’ speech include:**
* **Economic slowdown:** Williams anticipates economic growth of 1.25%-1.50% for the year, while forecasting unemployment to rise around 4.5% next year.
* **Inflation forecast:** Williams predicts PCE inflation at 3.00%-3.25% this year and 2.5% in 2026. He expects inflation to reach the Fed’s target of 2% by 2027.
* **Impact of tariffs:** Williams notes that tariffs are influencing prices and purchasing behavior, but doesn’t anticipate them leading to long-term inflation increases. The expected contribution of tariffs to inflation this year is between 1-1.5%.
* **Cooling labor market:** Williams observes a gradual slowdown in the job market, as evidenced by recent data trends.
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