Williams Sees One More Rate Hike in Late 2026

US Federal Reserve official John Williams suggested that one more interest-rate hike may be necessary late in 2026 to help contain inflation.

In a speech at the University at Buffalo on September 29, Williams said there was no urgency to act following the central bank's decision to lift rates earlier this month. The Fed raised interest rates by a quarter percentage point in September, their first hike since 2023, and Williams noted that this action gave the central bank time to gather more data.

Williams emphasized that his view on future policy would depend on the evolution of underlying trends for inflation and his assessment of the balance between demand and supply in the economy. He pointed out that artificial intelligence (AI) is a current driver of inflation, and its impact is still uncertain.

Following Williams' speech, the probability of a rate increase at the Fed's October meeting dropped to about 50% from 70%, based on pricing in federal funds futures contracts.