Williams Sees No Need for 2027 Rate Hike for Now

New York Fed President John Williams said he still considers one more interest rate increase in 2026 potentially appropriate, but currently sees no reason for another hike in 2027. He stressed that the outlook depends on incoming economic data and is his assessment, not a decision by the Federal Open Market Committee. Williams made the comments in an October 13 interview, saying inflation should ease toward the Federal Reserve’s 2% target in 2027. He expects the effects of tariffs to fade and energy prices to stop adding to inflation, while identifying investment linked to artificial intelligence as another source of price pressure. He said the September rate increase was the right call, pointing to persistent energy costs and their pass-through into other prices. The increase brought the Fed’s policy rate to a range of 3.75% to 4.00%, according to reporting on the decision. Williams said the broader economy was not overheating and described underlying inflation as cooling. On AI, Williams said demand for chips and related infrastructure is outpacing supply.