The "interest rate cut dream" has been shattered! The Federal Reserve's "top three officials" delivered two consecutive signals this week: leaning towards holding steady.

China Financial Times (CFETS) April 3 report (Editor: Huang Junzhi) On Thursday local time (the 2nd), New York Fed Chair William Williams (John Williams) said that the risk to inflation and jobs posed by rising energy prices is “in balance,” and that he still leans toward keeping interest rates unchanged.

In his remarks in the latest interview, he said, “Based on the measures we took last year and our current circumstances, monetary policy can actually balance these risks quite well, and that is what we need to do.”

As the chair of the New York Fed, Williams serves as the vice chair responsible for setting interest rate policy in the Federal Open Market Committee (FOMC), and—like Federal Reserve governors—has permanent voting rights. He is seen as the Fed’s “number-three figure.”

At last month’s FOMC meeting, the Federal Reserve decided to “hold steady,” and it is currently working to assess the impact of the surge in energy prices on inflation and economic growth. On Monday, Federal Reserve Chair Jerome Powell also said that monetary policy is currently in a favorable position from which it can assess the economic impact of the Iran war.

And this is already the second time this week that Williams has signaled his support for “holding steady.” On Monday, in a public speech, he said: “The current situation is indeed quite rare. But the current stance of monetary policy can balance the risks facing the goals of maximum employment and price stability quite well.”

Although the inflation outlook has “a high” degree of uncertainty, according to Williams, “the Middle East situation has led to a sharp rise in energy prices, which may push overall inflation up over the next few months. However, if oil prices fall after the conflict ends, some of the effects may be reversed later this year.”

Earlier on Thursday, Dallas Fed Chair Lorie Logan said that the U.S.-Iran war has increased the risks of a renewed surge in inflation and weakness in the labor market.

“This conflict has increased our uncertainty about the economy and the outlook. It makes our work more complicated because it increases the risks to our dual mandate.” She added.

Private credit won’t trigger systemic risk

In the latest interview mentioned above, Williams also said that he believes losses in the non-bank lending space (i.e., private credit) will not trigger systemic risk, even though some investors are demanding early redemptions. Williams said this is mainly due to the repricing of underlying loans.

“I don’t think this will pose a systemic risk to our system at this time,” he said, adding that policymakers are “closely monitoring” each bank’s risk exposures.

When asked whether certain private credit funds could be considered “too big to fail,” he replied, “Absolutely not.”