MNI BRIEF: Fed Is Committed To Avoiding Stagflation - Williams

New York Fed President John Williams on Friday said new policies from Washington will have meaningful impacts on the economy in the short-run, but the Fed is absolutely committed to avoiding the deanchoring of inflation expectations that then could lead to a real stagflationary scenario. 

"This is not stagflation," Williams said in Q&A at an event with the Puerto Rico Chamber of Commerce. "I'm old enough to know what stagflation was in the in the 1970s and early 80s. That was a period of double digit unemployment, double digit inflation. That was a period of sustained high inflation and economic weakness that we experienced." (See: MNI INTERVIEW: Fed Must Stay Hawkish Amid Tariff Shock-Kamin)

Still, Williams acknowledged risks to the economic outlook. "We're seeing though  some significant changes in policy that will have material, meaningful effects on the economy in the short run or over the next year or two," he said. "Those have to be taken into account as you think about the economic outlook and achieving our goals."

"The best defense against stagflation is have monetary policy very focused on our dual mandate goals and very focused on keeping inflation anchored," said Williams, vice chair of the FOMC. "They are anchored today. That's why I mentioned that so much. And we just need to make sure that stays the same."