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13.11.2026 07:56 AM
From 'no hurry' to 'data speaks clearly'

New York Fed President John Williams confirmed on Thursday evening that the Fed is prepared to do more. "Inflation is far too high and it continues to be even in the latest data," he said at an event in New York. Markets pay particular attention to comments from this centrist FOMC member because Fed Chair Kevin Warsh has recently pared back his own public economic assessments and likely path for interest rates.

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Williams's tone has shifted noticeably over two months. On September 2, he said the inflation trend was slowly moderating and, after the September hike, there was no rush, and it made sense to wait for more data. In mid-October, he expected another rate hike in 2026 but saw no need for further tightening in 2027. Now Williams says the data speaks very clearly: the economy is strong, the labor market continues to firm, and inflation is persistent. He argues the Fed still has much work to do to bring policy where it needs to be and that decisions will be made meeting by meeting based on incoming statistics.

He pointed to fresh datapoints. Core CPI rose by 0.3% m/m in October versus a 0.2% forecast, the third month in a row above expectations, while headline inflation gained 0.4% against a 0.3% consensus. Goolsbee called the print borderline worrisome. The labor market likewise offers little reason to pause: payrolls rose by 165k (consensus 65k), unemployment unexpectedly fell to 4.1%, and private sector job growth was the strongest since March.

Williams stressed the Fed should avoid unduly harming the maximum-employment mandate. He sees no signs of an overheating economy and judges the overall picture not to be imbalanced.

Also, he was upbeat on US government borrowing. In his view, fiscal strain is not primarily an economic problem: the country is growing faster than most, and an AI boom should deliver a decade of strong growth — so the resources exist to address budgetary issues; what is lacking is political will. He noted other countries also face fiscal strains, citing France, where 10-year yields recently rose above 5% for the first time since 2002 amid unrest.

At the same time, Williams acknowledged that some of the economy's strength may be fragile, and a significant slowdown or a shift in sentiment around AI could trigger a pullback. That caveat is apt after recent days when Nvidia shares plunged by about 20% on reports about its CEO. AI investment remains a core engine of US economic growth, and a cooling there would be the clearest risk to the Fed's aggressive scenario.

For FX markets, Williams's remarks mean that the committee center has joined the hawks, and the dollar gained another pillar of support. Yesterday's data was softer than expected — initial jobless claims 200k vs. 195k, existing home sales 3.75M vs. 3.85M, October budget deficit $404.1B vs. $298.6B forecast — but they didn't change the overall picture.

My base case remains a 25-bp hike on December 9, while a 50-bp step would become a real risk if the data keeps surprising to the upside. Today's US PPI is the first test, and I believe a stronger-than-expected print would cement expectations for three consecutive hikes and sustain pressure on EUR/USD and GBP/USD. Only a marked economic cooling or a sharp correction in AI-related activity would halt the dollar's advance, but there are no signs of that yet.

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