Clarifying the bottom line for interest rate cuts? New York Fed President: Anchoring inflation expectations is the "cornerstone" of central bank operations

According to the Zhitong Finance APP, New York Federal Reserve President Williams stated that stabilizing inflation expectations near the targets set by policymakers is the "cornerstone" of central bank work.

In a speech prepared for the meeting in Reykjavik, Iceland, Williams pointed out that a "key lesson" for central bank officials is the importance of maintaining well-anchored inflation expectations, especially during times of extreme uncertainty.

Williams' remarks come at a critical moment when the Federal Reserve faces potential conflicts in its dual mandate—maintaining price stability and achieving full employment. According to the latest survey from the New York Fed, U.S. consumers' medium-term inflation expectations surged in April, while households' views on the job market also became more pessimistic.

Meanwhile, President Trump continues to pressure policymakers to offset the negative impact of tariff policies on economic growth and the labor market through interest rate cuts.

Williams' comments indicate that he is particularly focused on the inflation management responsibilities within the Federal Reserve's mission. This echoes recent statements from Federal Reserve Chairman Powell, who emphasized that without price stability, sustained full employment is difficult to achieve.

Williams stated, "Today, regardless of economic shocks, changes in government policy, or fluctuations in globalization and de-globalization, central banks recognize that maintaining price stability is their duty: they are the defenders of price stability." He added that by effectively fulfilling their mission, "central banks have earned the trust of the public."

Despite rising unemployment and increasing inflation risks, Federal Reserve officials decided this week to keep the benchmark interest rate unchanged. Policymakers are waiting for clearer data to assess the actual impact of large-scale tariff measures on the economy.

Williams stated, "There is no doubt that uncertainty will remain a defining feature of the monetary policy landscape for the foreseeable future."

The Trump administration will engage in a new round of trade negotiations with Chinese representatives this weekend, and analysts hope this could be the first step for both sides to reduce tariffs.

In mid-April, Williams warned that policymakers need to ensure that a one-time inflation spike triggered by tariffs does not evolve into a more persistent inflation problem