Long-term U.S. Treasury yields have climbed amid robust economic activity rather than rising inflation concerns, Federal Reserve Bank of New York President John Williams said on Monday.
Speaking at a CNBC event, Williams attributed the increase in borrowing costs to a stronger-than-expected U.S. economy and substantial investment in artificial intelligence, data centers and broader technology sectors. The upward pressure on yields reflects confidence in sustained growth, he noted, while stressing that inflation expectations remain anchored near the Fed’s 2% target.
Williams acknowledged that geopolitical tensions in the Middle East and recent tariffs have contributed to keeping inflation above the central bank’s goal. However, he emphasized that the Fed has not observed second-round inflation effects from tariffs and that recent inflation data have been encouraging. The labor market, he added, remains stable and solid, supporting the outlook for gradual disinflation.
The New York Fed president reaffirmed that achieving 2% inflation in the foreseeable future remains the Fed’s primary objective. He also expressed optimism about the long-term economic benefits of AI, linking strong investment demand to higher yields. Williams indicated support for the outcome of the July FOMC meeting and noted that the Fed needs additional data before its next policy decision. He added that monetary policy implementation is functioning effectively, while Treasury debt management patterns do not complicate the central bank’s operations.
