Williams Sees One More Rate Hike by End of 2026

New York Fed President John Williams said that if the economy develops as he forecasts, one more interest rate hike may be necessary by the end of 2026. The Federal Reserve does not need to act urgently after raising its federal funds target range in September to 3.75% to 4%, according to Williams.

Williams expects inflation to reach around 3.5% at the end of 2026, before easing towards the Fed's 2% target by 2028. He projects U.S. economic growth at 2.25% this year and an unemployment rate of 4% next year.

Williams emphasized that inflation remains the primary concern for the Federal Reserve. He noted that artificial intelligence investment is driving up price pressures, while tariff-related pressures have largely abated due to the lack of fresh import tax increases.