Fed's Williams Supports Keeping Rates Steady, with Hikes Expected in 2026

Huoxing Finance reports that on June 3, Federal Reserve President Williams voiced support for maintaining interest rates unchanged, stating that monetary policy is “just right” and neither rate hikes nor cuts are necessary. We will monitor developments regarding the latest tariff measures, as upside risks to inflation have increased. There is no clear direction for future rates, and he does not find the Fed’s forward guidance particularly helpful. According to CME FedWatch data, expectations for rate cuts this year have largely been erased, while expectations for rate hikes have risen, with even a 75-basis-point hike now possible. The probability of the Fed holding rates steady throughout the year until the end of 2026 is 40.9%, while the probability of a cumulative 25-basis-point cut is only 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%. Additionally, the probability of a 25-basis-point cut at the Fed’s next meeting in June is 1.7%.