Fed's Williams: One more rate hike possible this year, no further hikes needed next year

BlockBeats news, October 14: New York Fed President Williams said another rate hike this year would be appropriate, but if the economic outlook meets expectations, further rate hikes may not be needed in 2027. He said he supported the September rate hike decision, mainly due to factors including rising energy prices and increased AI infrastructure investment.

Williams said the Middle East conflict has pushed up energy prices and transmitted them to core inflation through transportation, food, and other sectors; at the same time, data center and chip demand driven by AI construction is pushing up the cost of some goods and affecting labor costs in the construction industry. He said that although tariffs, energy prices, and AI demand have kept inflation above expectations this year, inflation expectations remain stable, core inflation indicators continue to decline, and inflation is expected to fall significantly next year and approach the 2% target.

Williams said the scale of AI demand growth is relatively large, with demand exceeding supply in the short term, but as chip capacity increases and productivity improves, the supply side may improve in the future and create a force that restrains inflation. Turning to the rise in U.S. Treasury yields, Williams said long-term yields are affected by multiple factors such as bond supply and demand, AI investment, fiscal policy, and energy prices, not just monetary policy.