Stocks, bitcoin, and rate cut odds jump as New York Fed President John Williams signals support for “near term” rate cut

New York Fed President John Williams said he “fully supported” recent rate cuts by the central bank and is in favor of an additional reduction in the “near term.”

Per the prepared remarks of a speech delivered in Chile, Williams said:

“Looking ahead, it is imperative to restore inflation to our 2 percent longer-run goal on a sustained basis. It is equally important to do so without creating undue risks to our maximum employment goal.”

“I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.”

Bitcoin pared some of its big losses, going from less than $81,000 to nearly $84,000 after these remarks hit the wires, while the SPDR S&P 500 ETF flipped to up 0.5% from down 0.5%. Event contracts show that the likelihood of the US central bank reducing its policy rate next month doubled to around 60% from 30% on these headlines.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

The New York Fed president is always a voting member of the Federal Open Market Committee. We’ve previously discussed that, for this reason, Williams’ words can often carry more weight than other monetary policymakers.

Odds of an interest rate cut in December increased yesterday after labor market data showed the unemployment rate rose to 4.4% in September, its highest level since October 2021.