Federal Reserve Bank of New York president John Williams warned that tariffs will likely contribute to inflation but stressed that uncertainty remains over their broader economic impact, per a Bloomberg report.

What Happened: Speaking at the Bloomberg Invest conference in New York, Williams said he expects some inflationary effects from President Donald Trump's tariffs later this year, Bloomberg reported.

"You also have to factor in how does that affect economic activity—decisions by businesses to invest, consumers to spend?" Williams said during the Bloomberg event, highlighting the complexity of the trade war's impact.

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When asked by Bloomberg Television's Michael McKee about potential interest rate adjustments, Williams maintained that monetary policy remains "modestly restrictive" and sees no immediate need for changes.

What Else: The Fed left borrowing costs unchanged in January and plans to hold steady unless inflation moves convincingly toward its 2% target.

Global markets have tumbled this week as Trump's tariffs on major trade partners deepened investor concerns. Traders and investors anticipate three rate cuts this year as the Fed navigates slowing growth and rising inflation risks.

Price Action: As of Tuesday afternoon, the SPDR S&P 500 ETF Trust ( SPY ) is down 2.6% for the week, trading at $580.52.

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