Fed's Williams Says Another 2026 Rate Hike Is Reasonable As October Odds Climb

Market expectations for another Federal Reserve interest rate hike jumped after New York Fed President John Williams stated Thursday that another rate increase before the end of 2026 is reasonable. Speaking at the London Macro Policy Forum, Williams cited inflation as the primary economic challenge, noted diminishing downside employment risks, and declared explicit forward guidance over. The comments followed the Fed's recent 25 basis point rate increase to a target range of 3.75% to 4.00%. Following his remarks, market-implied odds for an October rate hike jumped to 77.5%, up from roughly 53% a day earlier.