Fed's Williams sees no urgency for next rate hike
TLT•New York Fed President John Williams said there is no need for urgency after the Fed’s September rate increase, though one more hike may be appropriate late this year. Traders pared bets on an October hike and priced in one increase this year, most likely in December.
1. Williams urges patience
Williams said policymakers should watch incoming data before deciding what to do next, which he said should provide greater clarity about the economy. If conditions broadly match his forecast, one further increase in the federal funds target range may be appropriate late this year to support a timely return of inflation to the Fed’s 2% goal.
2. Inflation remains elevated
The Fed raised its target rate range by a quarter percentage point two weeks ago, to 3.75%-4.00%, and most policymakers signaled another increase would likely be appropriate this year. Economists polled by Reuters estimated inflation by the Fed’s preferred measure was 3.7% in the 12 months through August; Williams expects inflation to end the year around 3.5% and return to target in 2028.
3. Other officials weigh in
Chicago Fed President Austan Goolsbee said inflation had been above the 2% target for five and a half years, while saying he expects the Fed will eventually be able to cut rates. St. Louis Fed President Alberto Musalem argued that central banks should explain their policy decisions to the public, while Governor Michael Barr reiterated that further policy adjustments may be needed.
