Williams Sees One More Hike; Futures Price Three by 2027

John Williams, president of the New York Fed and vice chair of the FOMC, said one more rate increase this year will be appropriate, and that he does not see further hikes as necessary in 2027. He made the case in an interview with Bloomberg News on Oct. 13.

Futures traders are positioned further out. CME FedWatch data as of Tuesday put about 90% odds that the Fed's overnight rate ends 2027 at least 50 basis points above where it sits today. That price implies an increase in December and two more in 2027, three hikes against Williams's one.

Williams Sees One More Hike This Year, Then Nothing in 2027

He continues to support September's quarter-point increase, the first since 2023, and said one further increase this year would be appropriate. Beyond that, he expects no additional hikes in 2027, with overall inflation landing near the Fed's 2% target on an annual basis next year.

The case rests on underlying measures running below the headline. Williams pointed to the New York Fed's trend measure at around 2.3% and the Dallas Fed's trimmed mean at a similar level, and said the labor market is not adding to price pressure. "This is not an economy that is overheating overall," he said.

The headline prints are higher. The personal consumption expenditures index, the Fed's preferred gauge, was up 3.4% over 12 months in August, or 3% once food and energy are stripped out. Williams said tariff effects on price growth have mostly been seen, and that energy, still lifting inflation this year, may turn into a disinflationary force in 2027.

The one force he flagged as unresolved is demand tied to AI infrastructure, which he said is running ahead of supply and will take time to work through.

Futures Price a December Hike Plus Two in 2027

The FedWatch distribution, as of Tuesday, has the most likely range at 4.5% to 4.75% through the end of 2027, 75 basis points above today. That is the three-hike path. Williams's single-hike path, which would leave rates 25 basis points higher, gets about one chance in ten on the same data.

Timing separates the near term from next year. Futures point past the Fed's Oct. 27-28 meeting to the December gathering; the Fed meets at the end of October and once more in December.

Eight of 18 Officials Project Another Hike After This Year

Of the 18 FOMC participants who published a 2027 rate forecast, eight expect one more increase after this year's additional hike. Cleveland Fed president Beth Hammack and Dallas Fed president Lorie Logan have each signaled that more than one further move will be needed to get inflation back to target. Williams is a permanent voting member of the committee that sets rates.

Where Crypto Sits in the Repricing

Higher hike odds have shown up in the dollar and the long end. The US Dollar Index is at an 18-month high, and the 10-year Treasury yield touched 5.35% on Oct. 8, its highest in 24 years.

Bitcoin's own reaction to the last hike was not a selloff. It rose 13% after the September increase as institutional funds bought back in.

Two-year Treasury yields, the maturity most tightly tied to policy expectations, retreated after Williams spoke, unwinding an advance of as much as three basis points.

Bitcoin trades at $83,453, down 0.18% over the past 24 hours and about 34% below its all-time high of $126,080 set on October 6, 2025. Those market readings come from a single data page rather than an independent feed.

Wednesday's CPI Is the Last Print Before the October Meeting

September consumer price data is due Wednesday, the final inflation reading before the Fed's Oct. 27-28 meeting. Williams said he had no target in mind for the number, though a lower print would be preferable.

A soft print supports his one-hike path and argues against the 4.5% to 4.75% range holding through 2027. A hot print keeps the December plus two more pricing intact. The Fed's September minutes indicated another increase without saying when, so the near-term path rests on data rather than guidance.

Williams's path and the futures strip differ by two hikes, and Wednesday's CPI is the next number that can narrow the gap.