Williams says Fed may not have to hike rates in 2027, at odds with traders — SkimNews
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- John Williams said in a Bloomberg interview that he sees one more rate hike this year appropriate but no additional increases in 2027, adding he has "no reason to believe that we would need to do more."
- Fed funds futures traders are pricing in roughly 90% odds that the Fed's overnight rate ends 2027 at least a half percentage point higher than current levels, according to CME FedWatch data.
- Williams' view actually aligns with the majority of FOMC members who submitted 2027 forecasts — 8 of 18 see one more increase after an additional hike this year.
- The September rate hike was the Fed's first since 2023, with officials signaling in meeting minutes that another increase is planned but without specifying timing; the FOMC meets again at month's end and in December.
- Williams projected 2027 inflation should land "near" the Fed's 2% target, even as August PCE ran at 3.4% year-over-year (3% excluding food and energy).
- Williams cited ongoing "disinflationary forces," said tariff effects on prices have "mostly been seen," and flagged energy prices as continuing upward pressure on headline inflation.
Why it matters: Williams is a permanent voting FOMC member, so his view directly shapes the rate-setting debate — and his alignment with the majority of submitting members, not the 90%-priced trading floor, suggests the Fed's hiking cycle may end sooner than futures markets anticipate, potentially repricing the half-point of 2027 hikes currently baked in.
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