New York Fed President Williams links potential rate increases to sustained core PCE inflation above 0.2% in H2 2024.
New York Fed President John Williams indicated he would support rate hikes if monthly core PCE inflation averages above 0.2% in the second half of 2024. His comments reflect concerns over AI-driven demand outpacing supply, which could sustain inflationary pressures beyond transitory shocks like energy prices or tariffs.
Core PCE inflation has averaged 0.34% monthly this year, well above Williams’ threshold. While the bar for a July rate hike remains high, markets price a 33% chance for July and 70% for September, with upside surprises in upcoming CPI data potentially triggering dissenting votes.
Williams emphasized the Fed’s ability to overlook temporary price spikes but warned that persistent inflation would require a policy response. Other FOMC members may act sooner if inflation fails to cool as expected.