John Williams, who leads the Federal Reserve Bank of New York and holds a permanent voting seat on the Federal Open Market Committee, said recent economic data has been encouraging, with inflation moving slowly lower as tariff effects fade. Inflation is currently estimated at 2.75% to 3%, elevated mainly by tariffs and geopolitical disruption, including the ongoing conflict in the Middle East involving Iran. Williams said higher energy prices linked to the crisis have not produced significant second-round effects in services, suggesting the shocks are supply-driven rather than evidence of demand overheating. He expects inflation to move back toward the Fed’s 2% target during 2027-2028. Williams described rising yields as a sign of economic strength rather than heightened inflation concerns and said inflation expectations remain well-anchored. Ahead of the FOMC’s September 15-16 meeting, the committee must decide whether to raise rates from the current 3.5%-3.75% target range or hold them steady. Williams did not pre-commit to a policy path, saying decisions will depend on incoming data. A continued decline in inflation would strengthen the case for holding rates, while inflation remaining 75 to 100 basis points above target could make a pause appear complacent.