NY Fed President Williams says no urgency for another rate hike
New York Fed President John Williams said the Federal Reserve can take time to assess data before deciding on a further rate increase, though he expects one more hike before year-end if economic conditions follow his forecast.
Federal Reserve Bank of New York President John Williams told a university audience on Tuesday that the central bank has sufficient time to evaluate incoming economic data before deciding on any additional interest-rate move. He said the policy action taken at the September meeting removed any immediate urgency for a hike.
“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,” Williams said.
Williams added that his outlook is only a forecast and that “time — and the totality of the data — will tell.” He noted that the economy is growing robustly, the labor market remains solid, and that price pressures are now the primary focus for monetary policy.
“It is imperative that we return inflation to our 2% target on a sustained basis,” he said, stressing the need to prevent inflationary disturbances from becoming entrenched.
Financial markets had been pricing in a likely rate increase at the October policy meeting, but after Williams’ remarks, futures bets on a hike moved closer to even. He projected inflation to end the year around 3.5% and to ease further next year, with a longer-term target of returning to 2% by 2028.
Williams also commented that artificial-intelligence investment is contributing to price pressures, while tariff-related pressures have largely faded, provided no new import taxes are introduced. He said the outlook for oil prices depends on the Middle-East conflict, but expects any inflationary impulse from energy costs to diminish.
In a post-speech press interaction, Williams said higher long-term bond yields do not reflect a shift in investors’ inflation expectations, though they do tighten financial conditions at the margin. He forecast overall economic growth of about 2.25% this year and a unemployment rate of roughly 4% next year, citing demographic and productivity constraints.