New York Fed President: "Concerns Over Dollar Assets, but Treasury Market Remains Stable"

"It Will Take Time to Gain a Clear Economic Outlook"

John Williams, President of the New York Federal Reserve Bank, said on May 19 (local time) that although investors are reassessing their approach to investing in U.S. assets, there are no signs of large-scale capital movements.

John Williams, President of the New York Federal Reserve Bank. Photo by Reuters Yonhap News

At a Mortgage Bankers Association (MBA) conference held in New York on the same day, Williams noted that there are "rumors or concerns" about the status of U.S. dollar assets amid changes in government policy and very high uncertainty. However, he added, "There are no significant changes in the way foreign funds are flowing into the U.S. Treasury market."

Williams also commented on the recent rise in U.S. Treasury yields, saying that they have generally moved within a certain range and assessed that "core bond markets such as the U.S. Treasury market are functioning very well."

Williams further emphasized that it will take time for economic uncertainty to dissipate, especially considering the policy changes under the Trump administration. He said, "Given all the changes in government policy, it will take time to gain a clear outlook on how the economy is progressing," and mentioned that the Federal Reserve (Fed) can afford to wait a bit longer to determine where monetary policy should be positioned.

In addition, despite the increased uncertainty, Williams assessed that "the U.S. economy is in very good shape" and stressed that the Fed's currently somewhat restrictive monetary policy is well-prepared for future developments.

Meanwhile, Raphael Bostic, President of the Atlanta Federal Reserve Bank, said in a CNBC interview on the same day that, considering both the current upward pressure on inflation and concerns about a recession, he prefers that the Fed cut the benchmark interest rate only once this year. Bostic stated, "I expect it will take a bit more time for the (uncertain) situation to be resolved," and added, "I am leaning toward a single rate cut this year because I believe more time is needed."

Bostic does not have a voting right at the Federal Open Market Committee (FOMC) this year.