New York Fed President John Williams said another interest-rate hike before year-end would be a “reasonable” expectation, reinforcing the case that September’s increase may not be the Fed’s last move in 2026. Speaking Thursday at the London Macro Policy Forum, Williams said market participants viewed another hike this year as likely and added that this was a reasonable way to think about the outlook. But he stopped short of endorsing an October move, stressing that policymakers must first collect incoming data and assess the evidence as they did between July and September. That distinction is increasingly important as Fed funds futures now price around a 77.5% probability of an October hike, up sharply from around 53% a day earlier.
Williams also reinforced the Fed’s shift away from explicit policy signalling, saying the era of forward guidance is “over.” Rather than pre-committing to the next move, policymakers will allow the data to determine both whether and when further tightening is required. The approach closely mirrors Federal Reserve Chair Kevin Warsh’s communication strategy following this month’s 25bp hike to 3.75–4.00%. Williams noted that September’s move followed an accumulation of pressures rather than a single decisive data release, suggesting the hurdle for another hike will similarly depend on how inflation, growth and labor-market evidence develops over the coming weeks.
Inflation remains the central concern. Williams described it as the “big challenge” and said the Fed needs not only to return inflation to 2%, but to achieve that “in a timely manner.” At the same time, he said the US and global economies have proven resilient to the rise in energy prices, reducing the immediate growth trade-off from additional tightening. His remarks therefore support the broader case for at least one more 2026 hike, while leaving the increasingly aggressive October timing priced by markets unconfirmed. The next round of employment and inflation data will be critical in determining whether that year-end expectation turns into a back-to-back move next month.
Key Takeaways
- New York Fed President John Williams said another rate hike before the end of 2026 would be a “reasonable” expectation.
- He stopped short of endorsing an October hike, stressing that the Fed still needs to assess incoming data before deciding on timing.
- Markets have moved further than Williams, with October hike odds around 77.5%, up sharply from the previous day.
- Williams said explicit forward guidance is “over,” reinforcing the Fed’s shift toward meeting-by-meeting, data-dependent decisions.
- He noted that September’s hike reflected a build-up of pressures rather than one sudden data change, suggesting the same accumulation-of-evidence approach will guide the next move.
- Inflation remains the central concern, with Williams calling it the “big challenge” and saying the Fed needs to return inflation to 2% “in a timely manner.”
- His remarks support the case for another 2026 hike, but do not validate the market’s increasingly aggressive assumption that it will necessarily come in October.
