New York Fed President John Williams: Higher bond yields come with a strong economy

Summary

New York Fed President John Williams discusses rising bond yields, inflation, and Fed policy with CNBC's Steve Liesman. He attributes higher yields mainly to a strong U.S. economy and AI/data center investment rather than inflation compensation. He also says inflation is elevated but should trend down as tariff effects fade, and that the Fed remains data dependent.

• Williams says higher bond yields mostly reflect strong U.S. economic growth and investment in AI, data centers, and technology.
• He sees the yield rise as driven by real rates, not inflation compensation.
• He says oil and Middle East uncertainty may add risk premium to bond yields.
• He expects inflation to trend slowly lower as tariff and energy price effects fade.
• He supported the Fed's decision not to raise rates and emphasized data dependence.
• He warns that higher longer-term yields negatively affect interest-sensitive sectors and cause some crowding out.