New York Federal Reserve president John Williams on Tuesday poured cold water on the notion of an interest rate hike in October.

Speaking in Buffalo, N.Y., Williams said that, after raising rates in September, he sees "no need for urgency" and that "we have time to gather more information."

"The accumulation of more data should provide greater clarity on the underlying trends in the economy and the associated risks to achieving our goals — and thereby the appropriate setting of monetary policy," he said.

Williams sees one more rate hike "late this year" to support what he calls a "timelier" return of inflation to the Fed's 2% target. Late this year, to many, implies a hike timed for December rather than in October, when their next meeting takes place.

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New York Federal Reserve Bank president John Williams speaks to the Economic Club of New York in New York City on May 30, 2024. (Reuters/Andrew Kelly) · REUTERS / REUTERS

Markets had priced in higher odds of a rate hike at the Fed's next meeting on Oct. 27-28. On Monday, traders saw a 70% chance of an October rate hike; however, those odds dropped to around 50% as of this writing on Tuesday.

Williams is the vice chair of the Federal Open Market Committee and a member of what is regarded as the troika — a trio of the Fed chair, Fed vice chair, and New York Fed president — and thus a member of the central bank's leadership.

His outlook for rates is in line with the median forecast of the rate-setting committee, which also sees one additional rate hike this year.

Williams sees inflation of 3.5% this year, noting that "the inflationary impact of the AI-related demand shock is increasingly salient."

He now expects somewhat larger and longer-lasting effects from energy prices on inflation, a shift from earlier this spring when Williams had anticipated oil prices would come down this year and suggested inflation could fall on its own.

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