Business & Markets
New York Fed’s Williams sees room for another rate hike, but no rush
The New York Fed president’s remarks describe his own conditional forecast, not an FOMC decision. He cited persistent inflation risks tied to energy and AI-related demand after September’s quarter-point increase.
Executive summary
- Williams’s outlook: New York Fed President John Williams said one more increase in the federal funds target range may be appropriate late this year if the economy broadly follows his forecast. He emphasized that the path depends on incoming data and is his own outlook.[1][2]
- Why he sees inflation risk: Williams said energy costs and demand for goods used in the AI buildout are keeping price pressures elevated. He expects inflation to ease toward 2% in 2028 as energy prices normalize and AI-related supply catches up with demand.[1]
- What the Fed has decided: The Federal Open Market Committee raised its target range by a quarter point in September, to 3.75%–4%. Williams said that action leaves time to gather more information; his remarks do not commit the committee to another increase.[3][1][2]
New York Fed President John Williams said Tuesday that another increase in the federal funds target range could be appropriate late this year if the economy develops broadly as he expects. In remarks at the University at Buffalo, he paired that forecast with a warning against reading it as a timetable: the Fed has no need to hurry and should first gather more data, he said.[1][2]
Williams stated that the views in his speech were his alone and did not necessarily represent the Federal Open Market Committee or other Fed officials. His comments therefore describe one policymaker’s forecast, not a new decision or formal commitment by the committee. Reuters reported that traders pared expectations for an October move after the remarks.[1][2]
The FOMC raised its target range by a quarter percentage point at its September meeting, setting it at 3.75% to 4%. The committee’s statement said inflation remained elevated. Williams said the economy had proved resilient, while the balance of risks had shifted: employment concerns had receded and the risk to returning inflation to 2% had increased.[3][1]
Williams identified energy and commodity costs linked to conflicts and supply constraints, along with surging demand for goods tied to artificial-intelligence investment, as sources of continued pressure. He said these effects had lifted some prices but had not yet spread into broader, more persistent inflation. His forecast calls for inflation to average about 3.5% this year, ease to just above 2% next year and reach the Fed’s 2% goal in 2028.[1][2]
That trajectory is uncertain. Williams said a further increase may be appropriate only if the economy evolves in a manner consistent with his outlook, and that incoming evidence will guide the setting of policy. Other FOMC members can hold different views, and the committee will make its decisions collectively at future meetings.[1][3]