In a recent interview with CNBC, John Williams emphasized, “We aren’t really talking about rate cuts right now. It’s just premature to be even thinking about that.”
New York Fed President John Williams quashed rumors circulating on Wall Street about a potential reduction in interest rates
The statement caught stock market investors off guard, particularly after the Dow Jones Industrial Average reached a record high following the Federal Reserve‘s decision to maintain interest rates earlier in the week. Despite leaving the door open for a possible rate hike if inflation fails to meet the 2% target, Fed policymakers projected approximately 75 basis points of rate cuts for the upcoming year.
During a press conference, Fed Chairman Jerome Powell acknowledged that rate cuts were “clearly a topic of discussion out in the world and also a discussion for us at our meeting today.” Market expectations, however, seem to be leaning towards a different scenario, with the CME FedWatch Tool indicating a 70% likelihood of rate cuts by March based on Fed funds futures trading.
Goldman Sachs has gone further, anticipating the Federal Reserve to implement five rate cuts next year, with the first one anticipated in March
The central bank’s previous interest rate hikes have weighed on consumers throughout the year, resulting in mortgage rates approaching 8% and credit card rates hitting record highs. John Williams reiterated his earlier stance that the Fed’s rate-hiking cycle is approaching its peak, providing some reassurance amid the uncertainty surrounding future monetary policy decisions.
Despite the divergence between market expectations and the statements from key Fed officials like John Williams, Wall Street remains on edge, closely monitoring any developments that may impact the trajectory of interest rates in the coming months.