New York Federal Reserve President John Williams says data distortions from the government shutdown might have impacted the latest inflation report, resulting in rosier numbers.
Mr. Williams, speaking on CNBC, said there were “special factors” in the report issued Thursday, which found the Consumer Price Index rose by 2.7% in the 12 months leading up to November. The number beat forecasts of 3.1%.
“They weren’t able to collect data in October, and not in the first half of November. And because of that, I think the data were distorted in some of the categories, and that pushed down the CPI reading, probably by a tenth or so,” Mr. Williams said on “Squawk Box.”
The inflation report is a political boon for President Trump, who insists his agenda will bring down costs despite widespread gripes about prices.
Economists were skeptical of the numbers, however, noting gaps in data reporting, particularly regarding rent costs.
The Bureau of Labor Statistics was unable to conduct its normal October surveys during the federal shutdown, which lasted from October 1 to November 12. It relied in part on non-survey data to compile its index.
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Cooling inflation would help Mr. Trump politically, as the midterm elections loom, and make it easier for the Fed to cut interest rates again to boost hiring and give borrowers better terms.
Central bankers will closely examine the January release of December inflation data to determine if the most recent report was affected by such issues.
“I think we’ll get a better reading of how much that distortion, how big the effect was,” Mr. Williams said.
Mr. Williams also said there is no urgent need to slash interest rates again, even as the White House pushes for deeper cuts.
He said recent cuts “have positioned us really well” to boost the labor market while inflation cools.
Mr. Trump is in the final stages of interviews to select a new Fed chair to replace Chairman Jerome Powell, who leaves at the end of his term in May. The president is expected to pick someone who will align with his push for aggressive rate cuts.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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