- Federal Reserve Bank of New York President John Williams identifies AI-driven demand as a key inflation driver that could necessitate rate hikes if sustained.
- Williams emphasizes that monetary policy would need to respond if inflation proves more persistent and higher than baseline forecasts; otherwise, it remains well-positioned.
- A core PCE inflation rate of 0.2% monthly in the second half of 2024 would signal disinflation toward the Fed's 2% target; higher rates would indicate persistent inflation.
- Growing support for rate hikes among Fed officials, with nine policymakers projecting at least one quarter-point hike in 2026 and some considering a June increase.
- Fed minutes reveal discussions on responding to various inflation scenarios, capturing a 'collective reaction function' for economic conditions.
- Chairman Kevin Warsh initiates task forces to review Fed communications, balance sheet, inflation models, and study productivity and data sources, with a six-month timeline for suggested changes.
- Williams views the task forces as a 'unique and timely' opportunity to address key areas, noting an aggressive timeline for report delivery.