NY Fed's Williams warns of 'significant and unpredictable' risks to economy from Iran war

May 5, 2026 - 02:29

Federal Reserve Bank of New York President John Williams stated on Monday that current interest rate levels are "well positioned" to handle the economic landscape, but cautioned that the escalating conflict in the Middle East has introduced "significant and unpredictable risks" to the outlook. Speaking at a conference, Williams highlighted the difficulty in forecasting the economic impact of a potential war with Iran, noting that such geopolitical shocks are notoriously hard to model.

The central bank official emphasized that while the U.S. economy has shown resilience, the new wave of uncertainty could disrupt supply chains, energy markets, and global trade flows. He did not commit to any specific path for monetary policy, instead reiterating that the Fed will remain data-dependent. Williams' remarks come as investors closely watch for any signs that the conflict might force the Fed to adjust its stance on inflation or growth. The warning underscores the delicate balance policymakers face as they try to navigate between controlling price pressures and avoiding a downturn amid rising geopolitical tensions.