Watch CNBC's full interview with New York Fed President John Williams

Core Insights - The inflation report released recently came in lower than expected, indicating a continuation of the disinflationary process, although some data may have been distorted due to technical factors related to data collection [2][3][4] - The unemployment rate has edged up to around 4.5%, with steady job gains in the private sector, suggesting a gradual cooling of the labor market without signs of sharp deterioration [10][11][12] - The Federal Reserve's current monetary policy is seen as well-positioned, with a focus on gathering more data before making further decisions on interest rates [14][16][47] Inflation and Employment - The CPI data showed some positive signs, but technical factors may have pushed the reading down by approximately 0.1% [5][6] - The unemployment rate's increase may also be attributed to data collection issues, potentially boosting the rate by about 0.1% [10][11] - The overall labor reports are consistent with a gradual cooling of the labor market, with no indications of sharp declines [11][12] Monetary Policy Outlook - The Federal Reserve is not currently in a hurry to change interest rates, as the data does not indicate an urgent need for action [16][46] - The neutral interest rate is estimated to be slightly below 1%, with the current stance of monetary policy being mildly restrictive [20][22] - Future interest rate adjustments will depend on sustained inflation rates returning to 2% and the overall economic performance [47][48] Economic Growth Projections - GDP growth for the current year is projected to be between 1.5% and 1.75%, with expectations of growth picking up to around 2.25% next year due to factors like AI investment and strong financial conditions [24][25] - The potential for higher productivity growth from AI is viewed as a favorable tailwind for the economy, which could help achieve inflation targets without harming the labor market [27][28][29] AI and Labor Market Dynamics - The rise of AI is expected to create strong demand for labor in certain sectors while potentially displacing jobs in others, but it is not seen as a cause for structural unemployment [33][34] - The Federal Reserve is monitoring the balance between supply and demand in the labor market as AI continues to evolve [32][33] - Concerns about systemic risks from AI investments are acknowledged, but the focus remains on understanding the current economic landscape [35][36]