By Michael S. Derby
NEWBURGH, New York, May 7 (Reuters) – Federal Reserve Bank of New York President John Williams said on Thursday that demand for U.S. government debt remains robust despite high levels of borrowing.
The Fed is watching the very high level of government borrowing “very carefully,” Williams said at an event in Newburgh, New York.
While it may be surprising, there remains “enormous” demand for U.S. government debt offerings, and “America is still seen as the strongest economy in the world” and a good place to park cash, and “it hasn’t changed even with all the geopolitical issues and things like that,” he said.
Williams also said in his appearance that the Middle East conflict is increasing strains in supply chains. He said the U.S. was “a bit protected” due to its status as a major energy producer, but troubles are coming in Asia and Europe, as he warned of possible “spillovers” from the current situation.
Earlier this week, the New York Fed reported that global supply chain pressures had risen to levels last seen in the COVID-19 pandemic. Then, those pressures were major contributors to high levels of inflation.
Williams also said the U.S. economy had been quite resilient heading into the current energy shock driven by the Middle East war. “The big question mark” is how things go now given the jump in energy prices, Williams said, adding when it comes to still high inflation, the Fed will “make sure” and is committed to getting price pressures back to the 2% target.
(Reporting by Michael S. Derby; Editing by Chris Reese)
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