Fed's Williams: Inflation remains top priority, current interest rates are appropriate.

Federal Reserve official John Williams stated that bond yields are key information for the Fed to assess economic conditions. The recent rise in yields is mainly driven by strong economic performance, an upbeat economic outlook, and robust investment demand, with some correlation to Middle East conflicts. For now, yields do not appear to be significantly impacted by inflation prospects. Williams emphasized that the Fed will comprehensively consider all economic data, with its core mandate remaining achieving price stability, and bringing inflation down to 2% as the top priority. Tariffs and the Middle East conflict are the main factors keeping inflation above the target; no second-round inflation effects from tariffs have been observed so far, and inflation expectations remain anchored. Recent inflation data is encouraging, showing an overall downward trend, though services inflation remains notably high. He noted that the labor market is stable and solid, and it is necessary to push inflation back to 2% over the foreseeable future. Before making the next policy decision, Williams wants to further monitor and analyze economic data, and will continue gathering information for the upcoming FOMC meeting. He supported the July FOMC decision, deeming the current interest rate level appropriate, and that monetary policy implementation is proceeding smoothly. (Source: Jin10)