John Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, speaks at an Economic Club of New York (ECNY) event on Thursday, September 4, 2025 in New York, USA.
David Dee Delgado | Bloomberg | Getty Images
Communication in the Federal Reserve System, especially at the highest levels, rarely happens by chance.
Messages from the top, particularly the chair, vice chair, and influential New York Fed president, are carefully evaluated and tailored to convey clear ideas about policy without provoking an undue reaction in financial markets.
That’s why current New York Fed leader John Williams’ Friday speech was so important to markets. His position makes him a member of the Fed’s leadership troika, which also includes Chairman Jerome Powell and Vice Chairman Philip Jefferson.
So when Williams nodded to the possibility of “further interest rate adjustments in the near future,” investors took it as a message from above that leadership was leaning toward at least another rate cut soon (perhaps at the Federal Open Market Committee meeting in December).
“There is some ambiguity in the expression ‘near future,’ but the most obvious interpretation is in the next period.”
” said Krishna Guha, head of global policy and central banking strategy at Evercore ISI, in a client note.
“And while Williams may have been expressing his personal views, the signals from other members
“The views of the Fed leadership troika (vice chair, New York Fed president) on major policy issues are almost always approved by the chair, and it would be professional malpractice for the chair to issue this signal without approval from Powell,” he added.
Williams’ comments on interest rates come at a particularly sensitive time for the Fed and financial markets.
The policy-making FOMC, usually a consensus-driven group sometimes accused of lacking diversity of thought, suddenly found itself divided.
On the one hand, there are officials who believe that policy is still holding back growth and there is room for adjustment, while on the other, the other is represented by those concerned about inflation, who believe there is no need for further interest rate cuts and solid economic growth is expected, especially given the cuts already posted in September and October.
Mr. Williams offered little insight into the long-term trajectory of interest rate expectations, but it appears Fed executives support lower rates, at least in the short term.
This is especially important for financial markets, which have recently been reeling from concerns about an artificial intelligence bubble, as well as geopolitical concerns and continued uncertainty over the Federal Reserve’s monetary policy.
Stocks briefly rebounded on Friday, with futures improving after Williams’ comments caused the market to reprice expectations for a December rate cut. Continued concerns about AI have tempered the rally, but traders continue to bet on the move in December, with a 73% chance of a rate cut, according to CME Group’s FedWatch.
Mr. Williams likely saved the market from a deep selloff on Friday, with non-tech stocks mostly solid and the outlook for lower interest rates supporting the major averages. Major benchmarks were hit hard on Thursday, and investors feared another big drop on Friday.
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“Mr. Williams’ intervention comes as several other Fed speakers [December] However, they should distance themselves from assertive statements and perhaps [December] “The fight is turning into a governance crisis at the Fed, and we think Powell needs to be given a voice,” Guha said.
Admittedly, other speakers were less enthusiastic than Williams.
Boston Fed President Susan Collins and Dallas Federal Reserve President Laurie Logan both expressed reluctance to cut rates further. Collins expressed concerns about inflation in an interview with CNBC. Logan was even more hawkish, saying he wasn’t even sure he had voted for the cuts the last two times. Mr. Collins will vote on the FOMC this year, and Mr. Logan will be eligible to vote in 2026.
