New York Fed’s Williams calls inflation ‘far too high’ and signals more hikes as gold sinks toward a one-year low

New York Fed President John Williams said on Thursday that more interest-rate increases are likely as the US central bank works to bring inflation back to target^2,12.

He said inflation is still “far too high” and that the Fed has more to do to get it where it should be^3,6.

Williams said the Fed still has work to do to get monetary policy to the right place^1,7.

He described the economy as strong as he made the case for additional rate increases⁹.

His remarks followed this week’s stronger-than-expected inflation data⁴.

Core inflation rose 0.3% in October, a pace that Fed Governor Christopher Waller had earlier said would put a 50-basis-point hike on the table^4,5.

Why it matters to investors

Williams joins a widening group of officials pressing for tighter policy: the Chicago Fed’s Austan Goolsbee has sounded an inflation alarm, and Daly has also backed more tightening^9,14.

Bond markets took his comments as a guide to the near-term path: US and eurozone bond yields rose, but the two-year Treasury yield stabilized, which “was in part a reflection of the comments” from Williams, said Derek Halpenny, head of research at MUFG Bank^10,11.

Gold has borne the brunt of the shift, trading near a one-year low as investors ramped up bets on the Federal Reserve raising rates to combat persistent inflation¹³.

Spot gold traded at $3874 after touching a yearly low, with one measure putting the low near $3850¹⁴.

It rose on bargain hunting but was heading for a weekly decline¹².

Wholesale prices offered some relief: producer-price inflation cooled last month, although inflation over the past year remains well above trend¹⁵.

Stocks rose as that report eased worries about Fed hikes, after Williams had said earlier that policymakers must take further action¹⁶.

What to watch

The next question for markets is the size of the next move, since Waller has already put a 50-basis-point increase into the discussion⁵.

Williams’ backing for further increases makes it harder to read the cooler producer-price data as a reason to pause^15,17.

Gold’s slide has tracked those rate-hike bets, which leaves further hawkish remarks from Fed officials as the main pressure point for the metal^13,14.

Two-year yields are the clearest gauge of how far traders take the New York Fed’s guidance¹⁰.