NEW YORK (Reuters) -New York Federal Reserve President John Williams said on Monday that monetary policy is "well positioned" for what the economy might do this year, as he acknowledged there are risks that inflation could once again heat up. 

"Monetary policy is moderately restrictive," Williams said in an interview with Yahoo Finance, with the current setting of interest rates "putting some downward pressure on inflation."

Williams added that while he cannot predict when the U.S. central bank might change the current level of interest rates, keeping it in place "for some time" will allow officials to study incoming data and decide what they need to do next. 

Richmond Fed President Thomas Barkin, speaking separately in an interview with CNBC, said the timing of any rate cuts will depend on what happens with inflation. He noted that while he is nervous that the Trump administration's tariffs will push up prices, he is also worried the levies could hurt the job market.

"Call me nervous on both," Barkin said, adding that "there's a lot of uncertainty right now, and I think that makes the case for wait and see how this plays out."

The two central bankers weighed in at a time of high economic uncertainty as President Donald Trump continues to press forward with disruptive shifts in trade policy while at the same time downsizing the federal government, complicating any effort to gain clarity about the outlook for the economy. 

That uncertainty proved to be a defining characteristic of the Fed's rate-setting meeting earlier this month, where policymakers held the central bank's benchmark overnight interest rate steady in the 4.25%-4.50% range, while maintaining hopes they'll be able to cut rates later this year. 

RECESSION RISKS

The Fed's outlook has been complicated by the fact that Trump's tariffs, which could be significantly expanded on Wednesday, are almost certain to drive up inflation in the near term, with big questions about how long those gains might last.

At the same time, uncertainty is complicating businesses' efforts to plan and invest and is rapidly and dramatically souring consumers' attitudes.

All of this is leading to rising worries about an economic downturn. On Sunday, Goldman Sachs forecasters said they will raise their recession probability to 35% from 20%, noting "the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies."

The shift in the outlook has been driving financial markets to price in more Fed interest rate cuts as traders and investors reckon the central bank will have to take action to buoy the economy.

Williams said that while he was not going to try to put odds on the prospect of a recession, where the economy now stands is "very solid" with "good growth up to this point," with a still healthy labor market.

Williams also said "I can assure Americans that we will not allow high inflation to take root like we saw in the 70s and 80s" and that current economic conditions do not merit being called stagflationary, which is a time of weak growth and high inflation.

The New York Fed leader also said he needs to have more information before he can say definitely what tariffs will do to price pressures. He said his forecast is "that inflation will be relatively stable" this year, while adding there are "upside risks" for price pressures.

Williams also said that as he sees it, longer-run inflation expectations have remained stable and the Fed will make sure it stays that way.

Speaking at a Reuters NEXT Newsmaker event, International Monetary Fund Managing Director Kristalina Georgieva backed up Williams' outlook and said the process of slowing inflation will continue, albeit at a reduced pace this year.

She also said that "when we look at inflation expectations, they're a little higher, but not dramatically changing the disinflation trajectory between now and 2026."

(Reporting by Michael S. Derby; Editing by Leslie Adler, Paul Simao and Marguerita Choy)