October Fed Rate Hike Odds Drop to 44% After Williams’ Dovish Remarks

 

• NY Fed President John Williams says there is no urgency for another immediate interest rate increase.

• October Fed rate hike odds fall from over 70% to 44% after Williams’ remarks.

• On the flip side, Michael Barr keeps the possibility of another October rate hike firmly on the table.

October Fed rate hike odds have taken a sharp U-turn after New York Fed President John Williams said there is no need to rush another rate increase. Odds of a 25-basis-point hike have dropped from above 70% to around 44%.

The shift could give Bitcoin and the wider crypto market some much-needed relief.

Williams Pushes Back Against October Hike

Speaking at the University at Buffalo, Williams said the Fed’s unanimous decision last month to raise rates to 3.75%–4% gives policymakers enough time to assess new economic data before making another move.

“With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information.” 

Before Williams’ speech, futures markets priced in nearly a 70% chance of another 25-basis-point hike in October. Those odds later fell to around 44.8%, according to the CME FedWatch Tool.

A prediction market including traders on Kalshi has now turned toward no rate change in October, with those odds rising to 55.2%.

Also, what’s interesting is that the Fed has never raised rates in October ahead of a U.S. election.

Barr Keeps October Hike on the Table

The Fed’s message is not completely one-sided. Federal Reserve Governor Michael Barr said the central bank has been “knocked off course” by strong AI demand and higher oil prices, suggesting that policy may need to be recalibrated.

This puts Barr’s view at odds with Williams’ call for more time to assess incoming data. 

Still, Williams expects another hike later this year if the economy follows his forecast. He also expects inflation to reach 3.5% by the end of 2026.

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