New York Fed President John Williams said Tuesday he expects one more interest rate hike will be appropriate late this year if the economy evolves broadly in line with his forecast. Williams said he is in no rush for another rate hike in October, after the Federal Open Market Committee raised its benchmark rate by 25 basis points at its September meeting, adding that there is no need for urgency and time to gather more information. He said the risk to maximum employment has receded while the risk to achieving price stability has increased, pointing to the inflationary impact of the AI-related demand shock and expecting somewhat larger and longer-lasting effects from energy prices on inflation. Williams expects real GDP growth to average 2 1/4% this year and next, slightly above its longer-run trend pace, and expects unemployment to tick down to about 4% over the next year. On inflation, he expects about 3.5% this year, just above 2% next year, and a return to the Fed's 2% longer-run goal in 2028, stressing that it is imperative to return inflation to the 2% target on a sustained basis.
Williams expects one more rate hike late this year, signaling a higher policy rate path.
Expectation of an additional Fed rate hike pushes the 10-year Treasury yield higher.
