New York Fed President John Williams said there's "no need for urgency" on another rate hike, pushing back on an October move and knocking market-implied odds of a hike below 50%, according to CME FedWatch. The remarks came two weeks after the Fed raised its benchmark rate by a quarter point on September 16.
Williams, who serves as vice chair of the FOMC, called inflation at 3.7% "unquestionably too high" but argued the committee can afford to wait. One more hike "may be appropriate late this year," he said.
From 70% to a coin flip
The shift in rate expectations was sharp. Before Williams spoke, traders had priced the probability of an October hike above 70%. That's now below 50%. The Fed's two remaining meetings of 2026 are set for October 28 and December 9.
For crypto, the direction of rates matters more than the level. Higher rates pay savers more on cash and bonds, which pulls money out of riskier assets — including Bitcoin. The pattern has already played out once this cycle: Bitcoin rose 13% after the September hike as institutional funds bought back in, a rebound that suggested much of the tightening was already priced.
Barr isn't on the same page
Williams isn't speaking for the whole committee. Fed Governor Michael Barr said further policy adjustments are likely needed to bring inflation back to the 2% target in a timely fashion.
Barr, who tracks core PCE inflation closely, counted only two months out of the past 20 when it was in line with target. He also pointed to an unusual culprit: artificial-intelligence spending pushing up chip prices, which feeds through to broader inflation.
Neither official ruled out another hike this year. Williams' argument is about timing, not direction. Barr's is about the pace of progress — which he sees as too slow.
Wednesday's print is the next test
August PCE inflation data lands Wednesday, and it's the key catalyst for the near-term rate path. A hot reading could push October rate hike odds back toward 70%. A soft one gives Williams cover to hold.
Bitcoin was barely changed over the 24 hours ahead of the report, up just 0.2%.
The Fed's next move — or lack of one — depends on a single data point, and the crypto market is waiting on it.
