Comments from Fed’s Williams, reported by Bloomberg News, cross the wires:
- Currently sees no need for rate hike in 2027.
- Said there are still signs inflation will slow “quite a bit” and approach the Fed’s 2% target next year.
- One more interest rate hike appropriate this year
- The rate path will be about maintaining a balanced economy.
- Not seeing broader price pressure outside AI and energy.
- No sign the labor market is contributing to inflation
U.S. Treasury yield moves:
- 2-year: 4.795%, unchanged.
- 10-year: 5.217%, down 2.7 basis points.
- 30-year: 5.561%, down 3.7basis points.
Treasury yields moved lower following the comments. The dollar index also extended losses, trading down 0.36% at 102.17.
Analysis: Williams’ comments lean dovish. He sees inflation moving toward the Fed’s target next year and currently sees no need for a 2027 rate hike. That takes some pressure off expectations for further tightening, but it does not amount to a signal that rate cuts are coming.
The immediate reaction was lower Treasury yields and a weaker dollar. The key word is “currently.” The inflation data still need to support his outlook. If price pressures remain stubborn, that policy assessment can change.
There is only a 14% chance of Federal Reserve rate hike between now and the end of the year.
For October the chance of a rate hike is only 19%.
