Federal Reserve Bank of New York President John Williams said Monday that the central bank’s next move will likely be to lower interest rates — though he didn’t specify a timeline for when that will occur.

“Eventually we’ll have rate cuts,” but monetary policy is in a “very good place” for the time being, Williams said in comments before the Milken Institute 2024 Global Conference in Beverly Hills, California.

His comments come after last week’s meeting of the Federal Open Market Committee (FOMC), which sets monetary policy. Fed officials maintained the benchmark federal funds rate at a range between 5.25% and 5.5% and signaled it’s likely to remain there for some undefined period while they look for additional evidence inflation is falling toward the central bank’s 2% target.

Williams, who is a voting member of the FOMC, didn’t offer a timeline for reducing interest rates from the highest level in 23 years, given that the Fed’s favored metric shows that inflation is running at a 2.7% pace — well above the target rate. When excluding food and energy, underlying core inflation came in even hotter at 2.8%. 

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He said that he expects that U.S. gross domestic product (GDP) will rise between 2% to 2.5% this year after the economy expanded more rapidly last year. 

Williams also said the Fed’s efforts to shrink the size of its balance sheet have gone well and haven’t rattled financial markets.

The FOMC policymakers’ post-meeting statement from last week said they will need “greater confidence” that inflation is coming down before easing monetary policy. It added, “In recent months, there has been a lack of further progress toward the committee’s 2 percent inflation objective.”

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Fed chair Jerome Powell

Federal Reserve Chairman Jerome Powell said that despite signs that inflation isn’t coming down as quickly as hoped or may even be heating back up, the Fed isn’t likely to raise interest rates in response.

“I think it’s unlikely that the next policy rate move will be a hike,” Powell said after last week’s meeting. “We don’t see evidence that policy isn’t restrictive.”

FOX Business’ Megan Henney and Reuters contributed to this report.

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