Fed's Williams Backs Holding Rates Steady as Markets Price in Higher Odds of Hikes

June 3 — Fed official John Williams said he supports keeping interest rates unchanged, arguing current monetary policy is "just right" and that neither hikes nor cuts are needed. He said the Fed will watch how the latest tariff measures evolve, noting upside risks to inflation have increased. Williams added that the outlook for rates lacks a clear direction and that he does not find the Fed's forward guidance particularly useful. CME FedWatch data show expectations for rate cuts this year have largely been priced out, while the market has increased odds of hikes, including a scenario totaling 75 basis points. The probability the Fed keeps rates unchanged for the full year through end-2026 stands at 40.9%. The probability of a cumulative 25 basis-point cut is 0.7%. The probability of a cumulative 25 basis-point hike is 41.6%, a 50 basis-point hike is 14.6%, and a 75 basis-point hike is 0.1%. For the Fed's next meeting in June, the probability of a 25 basis-point cut is 1.7%.