Fed's Williams: No urgency for the next rate hike

New York Fed President John Williams said Tuesday that the Fed has time to weigh various data before deciding when to raise interest rates again. In his remarks, he noted that another rate hike is likely before the end of the year. "After completing the policy adjustment at the September meeting, we do not need to rush to act." Williams said that continuing to observe incoming data before finalizing the next policy step will help provide a clearer judgment of how the economy is performing. "If the economy evolves broadly in line with my expectations, it may be appropriate to raise the target range for the federal funds rate again later this year, to help bring inflation back to target more quickly." Williams also added, "This is only my personal forecast, and the final conclusion will depend on the time ahead and the full set of data." Interest rate futures markets see a high probability that the Fed will raise rates at its October meeting, and Williams' remarks appeared to cool that market expectation. In his remarks, Williams said that with strong economic growth and a resilient job market, price pressures have now become the core focus of monetary policy. "We must bring inflation sustainably back down to our 2% target." Williams said, "To achieve this, we must ensure that adverse inflation disturbances do not become entrenched and that any second-round effects from inflation remain low." The Fed has continued to raise rates to address inflation pressures that have remained above its 2% target for five consecutive years. In his speech, Williams mentioned that investment in artificial intelligence has also helped push prices higher; at the same time, he said that as long as the president does not introduce new import taxes, the inflation pressure from tariffs has largely faded. Williams expects inflation to be around 3.5% at the end of this year, with price pressures easing somewhat next year and the inflation target being reached in 2028. He also said economic growth this year is expected to be 2.25%. Immigration factors, an aging labor force, and low productivity levels have limited the economy's potential upside. Williams also forecast next year's unemployment rate at 4%.