John Williams, president and chief executive officer of the Federal Reserve Bank of New York, addressed an Economic Club of New York event in New York, US, on Thursday, September 4, 2025.
Communication at the Federal Reserve, especially from top officials, is carefully crafted. Messages from key figures such as the chair, vice chair, and the influential New York Fed president are designed to convey clear policy insights without unsettling financial markets.
This is why the recent speech by John Williams, the current leader of the New York Fed, was highly anticipated by market participants. As a member of the Fed's leadership trio, alongside Chair Jerome Powell and Vice Chair Philip Jefferson, Williams' words carry significant weight.
When Williams suggested a likely "further adjustment in the near term" for interest rates, investors interpreted it as a signal from senior leadership indicating a potential rate cut soon, possibly during the Federal Open Market Committee's December meeting.
"The phrase 'near term' is somewhat ambiguous, but it most obviously points to the next meeting," commented Krishna Guha, head of global policy and central bank strategy at Evercore ISI, in a note to clients. He further indicated that any message from members of the Fed's leadership is typically vetted by the chair, and it would be unprofessional for Williams to communicate such a message without Jerome Powell's approval.
Williams' statements come at a delicate time for the Fed and financial markets, which are experiencing division within the normally consensus-driven FOMC. This division pits officials advocating for policy adjustments against those focused on combating inflation and supporting growth without further rate cuts, especially after recent reductions in September and October.
While Williams did not elaborate on long-term rate expectations, his comments imply short-term support among senior leadership for a rate cut. This is crucial for financial markets struggling with fears related to an artificial intelligence bubble, geopolitical concerns, and uncertain Fed policy.
Stocks rallied on Friday as Williams' comments led to a market shift towards expecting a December rate cut. Though concerns about AI tempered the rally, traders still bet on a rate reduction, with a 73% probability according to the CME Group's FedWatch tool.
Williams' remarks likely averted a Friday market sell-off, as stocks outside the tech sector remained stable, supporting major indices with the prospect of lower rates. Major averages had faced significant declines on Thursday, with investors worried about another downturn. However, markets rebounded and approached session highs heading into the afternoon.