Fed’s Williams says inflation stubbornly high and Fed still has work to do on policy

Williams’ remarks support pricing for a December hike and the dollar’s rate advantage, keeping front-end Treasury yields firm. His emphasis on acting “over time” and on a steady, data-led approach suggests no urgency for a half-point move, which may limit how far bets on a larger hike can build. The comments add to pressure on gold, which has been falling as hike expectations push up real yields. Higher-for-longer messaging also keeps oil-driven inflation risk at the centre of the policy outlook.

Williams says the Fed has more tightening to do but suggests a steady pace, which supports a December hike without adding much to bets on a bigger move.

New York Fed President John Williams said inflation remains too high and the Federal Reserve still has work to do to get monetary policy to the right place, reinforcing expectations that the central bank will keep raising interest rates.

Speaking on a panel at a UC Berkeley alumni event in New York on Thursday evening (2330 GMT), Williams described inflation as stubbornly persistent.

He said the Fed will need to take action over time to bring it back to its 2% target.

He also said the Fed has been collecting data at a steady cadence, language that points to a methodical, meeting-by-meeting approach rather than a sudden change of pace.

Headline prices rose 0.4% on the month and core prices 0.3%, both above forecasts.

Since then, markets have priced a high probability of a quarter-point hike at the Fed’s 9 December decision, along with an outside chance of a half-point move.

Fed Governor Christopher Waller has said he would favour a quarter-point hike in December and could prefer a larger step if inflation runs hotter than expected.