New York Federal Reserve President John Williams said the central bank’s “modestly restrictive” policy stance remains appropriate as recently imposed U.S. tariffs begin to lift consumer prices. He estimated the levies will add about one percentage point to inflation from late 2025 through 2026, though their impact has been limited so far. Williams put headline inflation at roughly 2.5% in June and core inflation at about 2.75%. He expects price growth to average between 3% and 3.5% this year, ease to 2.5% in 2026 and return to the Fed’s 2% target by 2027. Without tariff effects, inflation would already be closer to the goal, he said. The policymaker projected U.S. output will expand by about 1% in 2025 and forecast the unemployment rate will climb to around 4.5% by year-end amid slowing job gains and labor-supply growth. Despite those headwinds, he described the economy and labor market as still in “a good place,” citing favourable financial conditions and ongoing disinflation in services. Williams added that the current interest-rate setting gives officials time to study incoming data and the evolving tariff impact before deciding on any policy adjustments, underscoring elevated uncertainty in the outlook.