New York Fed President Williams does not expect rate hikes in 2027 — CNBC
In the United States, Federal Reserve Bank of New York President John Williams said that after a possible additional interest rate hike in 2026, he sees no need for further increases in 2027. CNBC reported, citing the official's interview with Bloomberg News.
Williams said he has not changed his view on the appropriateness of one more rate hike this year. At the same time, he said there is currently no reason to believe that the Federal Reserve will need to do more.
Differences with market expectations
Williams' assessment differs from the sentiment among participants in the federal funds rate futures market. According to CME FedWatch data for Tuesday, traders mostly expected at least one hike in 2027. The latest trading priced in an approximately 90% probability that by the end of 2027 the overnight rate would be at least half a percentage point higher than its current level.
The New York Fed president's position also differs from the forecasts of some members of the Federal Open Market Committee, which sets interest rates. At the same time, it aligns with the view of the majority: eight of the 18 officials who provided projections for 2027 expect one additional hike after another move this year. Williams is a permanent voting member of the committee.
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Inflation expectations
The Fed raised rates in September for the first time since 2023. In meeting minutes, officials indicated plans for one more hike without specifying the timing. The central bank's next meetings are scheduled for late October and December.
Williams stressed that the outlook for next year will depend on new data, as various factors affect the economy. He called for focusing on underlying inflation trends amid price shocks related to energy and artificial intelligence.
In his assessment, inflation in 2027 will be close to the Fed's 2% target on an annual basis. The personal consumption expenditures price index, which the Fed prefers, rose 3.4% over 12 months in August, and 3% excluding food and energy. Williams believes that disinflationary factors persist and that inflation should slow substantially next year.
