John Williams, president and chief executive officer of the Federal Reserve Bank of New York, speaks to Bloomberg TV on Tuesday, April 7, 2026, in New York, USA.
Michael Nagle | Bloomberg | Getty Images
New York Fed President Williams said on Tuesday that he does not expect another rate hike in 2027, after one more rate hike this year.
“We remain of the view that one more rate hike may be appropriate,” Williams said in an interview with Bloomberg News. “At this point, I don’t think there’s any reason to believe we need to do anything more.”
Williams’ comments have put him at odds with markets and some members of the central bank.
Federal funds futures traders largely believe the central bank will raise rates at least once in 2027, according to data from CME’s FedWatch as of Tuesday. The latest trading puts the odds of the Fed’s overnight rate ending 2027 at least 0.5 percentage point higher than it is now, about 90%.
The New York Fed president is also at odds with many members of the Federal Open Market Committee, but remains aligned with the majority. Eight out of the 18 respondents who answered their interest rate outlook for 2027 expect one more rate hike after this year’s. Mr. Williams is a permanent voting member of the FOMC, the body that decides where interest rates should be set at each Fed policy meeting.
The Fed announced its first rate hike since 2023 in September. Fed officials hinted in their meeting minutes that they plan to raise rates further, but did not say when. The central bank will meet later this month and then again in December.
Indeed, Williams told Bloomberg that “we’ll have to wait and see” when it comes to predictions for the new year.
“This economy has been affected in many ways and we need to continue to monitor the data,” Williams said.
“Disinflation” trend
Williams said the Fed should focus on the “underlying trends” in inflation amid price shocks related to energy and artificial intelligence.
The former San Francisco Fed president warned that energy prices continue to put upward pressure on overall inflation, but said it could lead to easing on an annual basis in the future. Mr. Williams also said that the impact of tariffs on price increases has largely been seen.
He said overall inflation in 2027 should be “closer” to the Fed’s annual target of 2%. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditure Price Index, rose 3.4% in August over the 12 months, or 3% excluding food and energy prices.
“I still believe there are disinflationary forces at play. I don’t think those forces have fundamentally changed,” Williams said. “In fact, my prediction for inflation next year is that it will come down quite a bit.”
—CNBC’s Matt Peterson contributed to this report.
