MNI BRIEF: Fed's Williams - Longer Lag To Price Expectations

Federal Reserve Bank of New York President John Williams said Friday an analysis of data over the last ten years shows shocks to the economy affect inflation expectations with a longer-than-expected lag. Williams' remarks did not touch on the economic outlook or monetary policy.

"In all cases, there is a lag of about eight months before the shock affects inflation expectations. This is surprising since inflation expectations are forward-looking and should move soon after a surprise," said Williams in prepared remarks for the 2025 U.S. Monetary Policy Forum, sponsored by Chicago Booth. 

He said his analysis also shows there was no sign of inflation expectations becoming unmoored at any forecast horizon in recent years relative to the pre-pandemic period. (See: MNI INTERVIEW: Fed To Closely Gauge Inflation Views - Schoenle)