The economy "still has a way to go" before inflation falls to its target level of 2%, John Williams, New York Fed president John Williams warned.

Speaking at an event in India, Williams said the Federal Open Market Committee is "committed to getting the job done" but admitted it may take a while.

During his speech—entitled Managing the Known Unknowns—he warned "uncertainty will continue to be the defining characteristic of the monetary policy landscape."

Williams went on to cite artificial intelligence, deglobalization, and climate change as just some of the factors that could fuel inflation in the foreseeable future.

He said the Fed had "acted decisively" to bring inflation under control following the dual shock of Covid and the war in Ukraine, which led to global supply chain disruptions.

However, Williams says the Fed has to remain independent to get its job done—perhaps a pointed remark to Donald Trump, who pushes for greater oversight of the Fed.

Williams added that transparency and accountability are also crucial for the Fed's success, which means clearly communicating the rationale behind its strategy and policy decisions.

"For households and businesses, an explicit and credible inflation target helps take some of the uncertainty off the table so they can focus on planning for their future without having to worry about what will happen to inflation," he said in Mumbai.

This is why the FOMC has "clearly, consistently and repeatedly emphasized its strong commitment to its 2% inflation target."

A wait-and-see approach

Recently released minutes from the Federal Open Market Committee's meeting in June show its members have been encouraged by recent inflation readings—but need further data before they're confident that it's time to cut rates.

"Participants judged that although inflation remained elevated, there had been modest further progress toward the 2% goal in recent months," the minutes said.

FOMC members warned that progress in easing inflation "had been slower this year" than previously expected and unanimously decided that it would not be appropriate to reduce the target range until they receive additional information.

The Fed uses the Personal Consumption Expenditures index (PCE) as its preferred gauge for inflation, which excludes volatile food and energy prices to give a clearer view of underlying inflation.

The latest figures show that PCE rose 2.6% in the year to May—an encouraging development considering it had been stuck at 2.8% in April, March and February.

All eyes now are on the latest Consumer Price Index for June, which is set to be released on Thursday. Economists polled by Reuters widely expect it will show a year-on-year rise of 3.1%, compared with the 3.3% seen in May.

This, when coupled with slowing jobs growth and rising unemployment, could offer the additional information that the FOMC has been looking for to justify cutting interest rates.

The committee is next scheduled to meet on July 30 and 31.