Williams Sees One More Rate Hike Needed to Hit Inflation Target
New York Fed President John Williams said that the Federal Reserve may only need one more interest rate increase this year to bring inflation back to its 2% target. Speaking at the University at Buffalo on September 29, Williams noted that following the decision made at the September meeting, there is no need for urgent further steps.
Williams suggested that an additional adjustment to the target range for the federal funds rate could be appropriate at the end of the year if the economy develops in line with his forecast. He stressed that this was only his own assessment and that the final decision would depend on timing and the full range of economic indicators.
The Fed raised the target range for the rate by 0.25 percentage points to 3.75-4% just two weeks before Williams' speech, with most central bank officials signaling another rate hike could be justified. Financial market participants have since lowered expectations for an October increase and are now forecasting one Fed move this year, likely in mid-December.
Williams forecasts that inflation will end the year at about 3.5%, while price pressures will ease next year. He expects inflation to return to 2% in 2028, which is still above the current target.