Fed's Williams: Another interest rate hike may come this year, but there is no need to rush.

New York Federal Reserve President John Williams said there is no need for the Fed to rush into further action after its September interest rate hike, noting policymakers can wait for more economic data to determine the next policy direction. Williams added that if economic developments align roughly with his expectations, the Fed may need to raise the federal funds rate target range further before the end of the year to push inflation back to the 2% target more promptly. He emphasized this is only his personal forecast, with final decisions dependent on future data performance. Williams stated that amid solid economic growth and a strong labor market, inflationary pressures will remain a core focus of monetary policy. The Fed must ensure inflation does not stay persistently high due to shocks and avoid the formation of second-round inflation effects, he added. Williams pointed out that this year’s inflationary pressures stem from factors including former President Trump’s tariff policies, rising energy prices driven by the Middle East conflict, and AI investment which has also amplified some price pressures. He projected U.S. inflation will hit around 3.5% by the end of this year, then gradually decline and return to the Fed’s 2% target by 2028. Williams also forecast U.S. economic growth will come in at roughly 2.25% this year, with the unemployment rate hitting around 4% next year. He noted that immigration, an aging population, and limited productivity growth have constrained the economy’s long-term growth potential. (Jinshi)