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Fed's Williams Sees 'No Urgency' for Next Rate Hike, but Signals One More Likely This Year
NY Fed President John Williams said the Fed has time to weigh data before hiking again, pushing October hike odds back to roughly a coin flip.
Why it matters
Federal Reserve Bank of New York President John Williams said Tuesday (September 29) that with the September meeting's quarter-point increase lifting the federal funds target range to 3.75%–4%, the Fed has "no need for urgency" on when to raise rates again. Watching incoming data first "should provide greater clarity" on how the economy is performing, Williams said in remarks prepared for delivery at the University at Buffalo in Buffalo, New York.
His comments push back on market expectations: futures markets had at one point priced roughly a 70% chance of a hike at the October meeting. After Williams' remarks, money markets moved back to roughly a coin flip on an October move, the dollar index faded its afternoon gains, and the two-year Treasury yield pulled back.
Full report
Williams added that "if the economy evolves in a manner broadly consistent with my forecast, one further upward adjustment of the federal funds target range may be appropriate late this year to support a timelier return of inflation to target" — but stressed "that is just my forecast, and time — and the totality of the data — will tell."
With the economy growing robustly and the job market holding in, Williams said price pressures can now be the main focus for monetary policy: "It is imperative that we return inflation to our 2% target on a sustained basis." Fed Governor Michael Barr, speaking the same day, said further policy adjustments are likely needed for inflation to return to target in a timely way, and noted the investment surge tied to the AI buildout is having a measurable effect on prices.
Markets ended the day on a subdued note: U.S. stocks closed modestly lower, gold hovered near a seven-week low around $4,143 an ounce, and the Conference Board's September consumer-confidence index fell 6.7 points to 81.9 — a 12-year low.
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