Fed's Williams: Rates on Hold as AI Investment Supports US Economy

New York Fed President John Williams said on May 28, 2026, that the U.S. central bank is in no rush to adjust interest rates, describing current policy as "well positioned" to let officials monitor the impact of the US-Iran war on inflation and a surge in AI investment supporting growth. Speaking at a conference in Reykjavik, Williams noted that while Middle East conflict and tariffs continue to push up prices, he expects inflation pressures to peak in coming months. The Fed last month held rates at 3.5%-3.75%, and Williams said the stance is "slightly restrictive" but appropriate for now. He stressed that AI-related infrastructure and data center spending has been a key driver of productivity gains, preventing a weaker economy. However, he cautioned that identifying structural shifts in productivity is highly uncertain, making it difficult to gauge the long-term impact on rates.