A top official from the United States Federal Reserve has stated there is no pressing need to reduce interest rates further at this moment. He cautioned that recent key inflation figures might have been skewed due to disruptions caused by the lengthy federal government shutdown earlier this year.
Shutdown Created Data Distortions, Says Williams
In an interview with CNBC on Friday, John Williams, the President of the Federal Reserve Bank of New York, explained the potential impact on data collection. He noted that government agencies were unable to gather price information throughout October and the first half of November during the record-long shutdown.
"Because of that, I think the data were distorted in some of the categories, and that pushed down the consumer price index reading probably by a tenth or so," Williams stated. He admitted it was challenging to measure the exact effect but suggested that the inflation data for December would offer a much clearer view of the actual situation.
Analysts Echo Concerns Over CPI Figures
Williams' comments follow the delayed release of the US Consumer Price Index (CPI) report this week. The data indicated that inflation had eased to 2.7 per cent in November, down from 3 per cent recorded in September. However, many economists had already warned that these numbers might not accurately reflect the true underlying price pressures in the economy.
Some market analysts pointed to an additional factor that could have biased the data downward. They suggested a higher proportion of price quotes might have been collected during the Black Friday sales period, when discounts are prevalent. Williams acknowledged this concern as well.
Current Monetary Policy Stance Deemed Appropriate
When questioned about how the latest inflation figures influence his outlook on monetary policy, President Williams was clear. He affirmed that the Federal Reserve's current policy position is suitable for the present economic conditions.
"I don't personally have a sense of urgency to need to act further on monetary policy right now," he said. Williams added that the three interest rate cuts implemented by the Fed this year have already positioned policymakers well to support the economy as the labour market showed signs of weakening.
The central bank has signalled it will require a higher threshold of economic evidence before considering any additional policy easing. The Federal Open Market Committee's next scheduled policy meeting is set for late January, where officials will review fresh data, including the crucial December inflation report.
