Fed Chair in New York May Raise Rates Later

New York Federal Reserve President John Williams stated that raising interest rates again later this year could be appropriate to help contain inflation, according to comments he made during an event at the University of Buffalo. He noted that the Federal Reserve's decision in September to raise rates by a quarter of a percentage point provides time to gather more data, while leaving open the possibility of an additional increase at the end of the year if conditions develop as expected. Following his remarks, the chances of a rate hike at the October meeting dropped to around 50%, with the market leaning toward the possibility of a December increase instead of October. Williams emphasized that his decision depends on the evolution of inflation and the balance between supply and demand, pointing out that forecasts suggest inflation will continue to rise due to factors like artificial intelligence and rising energy prices. Meanwhile, inflation in the United States is expected to reach 3.5% this year and to decline to below 2% by 2027. He clarified that monetary policy remains accommodative and stressed the importance of monitoring economic developments and labor markets, especially in light of the ongoing increase in long-term bond yields.

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