John C. Williams, president and chief executive officer of the...

John C. Williams, president and chief executive officer of the Federal Reserve Bank of New York, speaks to business leaders Wednesday at the Cradle of Aviation Museum in Uniondale.  Credit: Howard Schnapp

The U.S. economy isn’t yet at the stage where interest rates can be lowered, the No. 2 executive on the Federal Reserve’s rate-setting committee told Long Island business leaders on Wednesday.

Speaking in Uniondale, John C. Williams, CEO and president of the Federal Reserve Bank of New York, said, “While the economy has come a long way toward achieving better balance and reaching our 2% inflation goal, we are not there yet. I am committed to fully restoring price stability in the context of a strong economy and labor market,” he said.

Inflation, as measured by the Consumer Price Index, has come down from a 40-year peak of 7% in December 2021, year over year, to 3.1% in January. But it remains above the Fed’s target of 2%, Williams told a luncheon organized by the Long Island Association.

“There will be bumps along the way” before price gains stabilize, he said.

Asked by LIA CEO Matt Cohen when the Federal Open Market Committee would begin to cut interest rates, Williams said, “I would say later this year …[but only after the committee has] confidence that we've not only brought inflation down from 7% to 3% or to 2½%, but we're really on that path to get inflation at 2% on a sustained basis.”

Williams is the No. 2 member of the open market committee after Federal Reserve chairman Jerome Powell.

Williams predicted U.S. economic growth would slow in 2024, with the gross domestic product, the sum of all goods and services, climbing about 1.5%, year over year. He also said the unemployment rate will “rise modestly, peaking at around 4%.”

Williams addressed other topics in fielding questions from the audience of about 350 business leaders and later from four reporters.

  • Remote work: He said it's not going away and the ramifications for the owners of office buildings will go on for years. Still, employers have made adjustments such as hiring workers in other states, which has boosted demand for Long Island's skilled workforce.
  • Banking woes: “I don't see this as a particular crisis,” he said, referring to the financial pressures on Hicksville-based Flagstar Bank, formerly called New York Community Bancorp, and other regional banks from the plummeting value of office buildings and other commercial properties.
  • Artificial intelligence: Williams warned that A.I. could lead to the elimination of jobs in computer software development and other fields. “Whether this fundamentally transforms the economy … I think it's still an open question,” he said.

Williams' appearance at the Cradle of Aviation Museum lunch was part of a daylong tour of Long Island businesses and universities. He and his predecessors have periodically visited areas of New York State, northern New Jersey, southwestern Connecticut, Puerto Rico and the U.S. Virgin Islands, all of which are part of the New York Fed’s territory.

Williams said the trips are designed to help him gauge local economic activity and hear directly about the concerns of employers and employees.

He began Wednesday with a meeting of Suffolk County economic development officials followed by a tour of D’Addario & Co., an East Farmingdale-based manufacturer of guitar strings and other musical instrument accessories. Later, he visited Hofstra University’s new Science and Innovation Center and participated in a discussion about the issues facing low- and moderate-income Long Islanders.

Williams, 61, came to the New York Fed in 2018 after serving as president and CEO of the Federal Reserve Bank of San Francisco and senior economist for the White House Council of Economic Advisers under then-President Bill Clinton in 1999-2000.

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