New York Federal Reserve President John Williams has a bit of good news and a bit of bad news on inflation. The good news: the effect of existing tariffs on prices should fade over the next few months. The bad news: new tariffs are coming, and they'll push prices up again.

Speaking at the Cynosure Group Spring Symposium in New York City on Monday, Williams said the impact of tariffs—which have largely been borne by domestic producers and consumers—has "not yet fully played out." But he expects the pass-through of current tariffs to be largely completed in the coming quarters, meaning their contribution to inflation will diminish.

However, Williams also warned that a new wave of tariffs is likely in the near future, which will exert additional upward pressure on import prices. On top of that, the Middle East conflict is driving up oil and input costs, leading to higher prices for fuel, airfares, groceries, fertilizers, packaging, and other consumer goods.

The labor market, at least, isn't making things worse. Williams pointed to the New York Fed's Labor Market Tightness Index and wage growth data, which show that the labor market is not contributing to inflation pressures. He also noted that inflation expectations remain "well-anchored," which helps support price stability even during economic shocks and uncertainty.

Still, Williams expects inflation to stay above the Fed's 2% target, primarily due to increased tariffs and energy costs.

Americans Feel Inflation Squeeze

Williams's comments come on the heels of a study by the Federal Reserve last month, which confirmed that tariffs implemented by President Donald Trump are entirely responsible for the recent surge in core goods inflation. The study estimated that tariffs implemented through November raised core goods personal consumption expenditure (PCE) prices by a staggering 3.1% through February.

Meanwhile, an alternative measure of core inflation—the trimmed-mean PCE inflation rate promoted by the St. Louis Fed—has drawn criticism. Otavio Costa, CEO of Azuria Capital LLC, said the new measure, associated with Fed Chair nominee Kevin Warsh, intentionally obscures the reality of soaring prices by excluding extreme price fluctuations from the data.

A poll published in late April found that 55% of Americans say their finances are getting worse due to war-driven inflation. That marks the fifth consecutive year that more Americans report worsening rather than improving financial conditions.