Central Banks' Crucial Role in Price Stability Emphasized by NY Fed President

John C Williams, the President of the Federal Reserve Bank of New York, emphasized the importance of central banks owning the responsibility for price stability and having the independence to act. Speaking at the RBI headquarters, Williams highlighted that transparency and credibility are key for central banks to manage inflation effectively.

John C Williams, President and Chief Executive of the Federal Reserve Bank of New York, underscored the imperative role of central banks in achieving and maintaining price stability during a talk at the Reserve Bank of India headquarters on Friday.

Williams, also a member of the Federal Reserve's rate-setting panel, pointed out that uncertainty will continue to be a definitive aspect of monetary policy. He stressed that central banks must be accountable and independent to sustainably deliver low inflation rates, citing historical lessons from the 1970s.

He further elaborated that the key tenets of inflation targeting, such as clarity in goals and strategy, ownership of price stability, and independence of action, have been crucial in navigating recent economic challenges. Williams concluded that despite future uncertainties including artificial intelligence and climate change, central banks must anchor expectations and commit to explicit inflation targets.

(With inputs from agencies.)