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Federal Reserve Bank of New York Chairman and Chief Executive Officer John Williams during a Bloomberg Television interview in New York, U.S., on Tuesday, April 7, 2026. <\/p>\n
Michael Nagel | Bloomberg | getty images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
New York Fed President John Williams on Thursday expressed concern about the impact of the Iran war on the economy, saying there are already signs of rising prices and slower growth.<\/p>\n
In a speech to bankers in his home district, Williams said the conflict had “intensified uncertainty” around national and local situations. <\/p>\n
While he expressed general confidence that growth will continue and inflation will moderate over the course of the year, he said there are risks to both sides of the Fed’s dual mandate for stable prices and low unemployment.<\/p>\n
“Assuming that energy supply disruptions will subside soon, energy prices should decline, and these impacts should partially subside later this year,” Williams said. “However, this conflict could result in a massive supply shock that could have pronounced knock-on effects that simultaneously drive up inflation \u2013 through increases in intermediate costs and commodity prices \u2013 and slow economic activity. This is already beginning to be seen.”<\/p>\n
Such a situation \u2013 slow growth and high prices \u2013 is commonly known as stagflation and presents a toxic mix for central bank policymakers, who will be left to choose which side to prioritize.<\/p>\n
Fed Chair Jerome Powell recently rejected that characterization for the U.S. economy, but Williams’ comments indicate it remains a matter of concern for policymakers, if in less of a sense than the dire episodes that prevailed in the late 1970s and early ’80s.<\/p>\n