Williams sees no 2027 hike, but the Fed's own median says the same and markets price more

New York Fed President John Williams told Bloomberg News on Tuesday: "I haven't changed my view that it may be appropriate to have one more rate hike," adding that "I don't think at this time I have any reason to believe that we would need to do more," according to CNBC. He also said "we'll have to see" when it comes to the year ahead, and that he expects inflation next year to "come down quite a bit."

CNBC framed this as Williams being at odds with the market and with some of his colleagues. Both are true. But the headline hides the more useful fact: he is not at odds with the Fed's committee as a whole.

He is sitting on the median

The Fed's September projections put the median federal funds rate at 4.1% at the end of 2026 and 4.1% at the end of 2027, then 3.9% in 2028. The Fed raised its target range to 3.75%-4% on September 16, a midpoint of 3.875%. So the median participant sees one more quarter-point move this year and nothing in 2027. That is Williams' sentence, almost word for word.

What the median hides is the spread. The central tendency for end-2027 runs from 3.6% to 4.4%, and CNBC counted eight of the 18 participants forecasting at least one more increase in 2027 beyond this year's. Williams is in the half that does not.

The gap with the market

CNBC, citing CME's FedWatch data, said futures gave about 90% odds that the overnight rate ends 2027 at least half a point above today's. Half a point above 3.875% is about 4.375%. The Fed's median for the same date is 4.125%. So traders are paying for at least one more quarter-point move than the committee's median shows, and the committee itself is split on it.

The bond market sits on the traders' side. The Treasury's daily curve showed the 2-year at 4.79% on October 13, the 10-year at 5.21% and the 30-year at 5.56%. A 2-year yield about 90 basis points over the current midpoint is a market expecting overnight rates to keep rising, not one that has finished with the Fed.

Why he thinks it stops

Williams pointed to what he called disinflationary forces and said the Fed should look at "underlying trends" through price shocks linked to energy and artificial intelligence. CNBC reported he said tariff effects on prices have mostly already shown up. The inflation he is looking past is not small: CNBC put August PCE inflation at 3.4% over twelve months and 3% excluding food and energy. The Fed's own projections have 2027 PCE inflation at 2.3% and core at 2.5%, so his forecast of "near" 2% is more optimistic than the median.

That is the part to watch. If inflation comes in nearer the committee's 2.3% than Williams' "near" 2%, his own framework has room for a second hike, and he left it open.

What it means in dollars

For a floating-rate line tied to the bank prime rate, which conventionally sits three points above the top of the Fed's range and so is 7% now, each quarter point is $625 a year on $250,000 drawn, about $52 a month. The Fed's median path adds one of those. The market's path adds at least two.

• Contractor or tradesperson with a floating line: the difference between the two paths is at least $52 a month per $250,000 by the end of 2027, and it arrives within a billing cycle of each move.
• Owner with a fixed-rate loan: nothing changes until the loan matures or reprices, and then it is the 5-year and 10-year yields that matter, not Williams.
• Anyone refinancing or buying property: long rates are set by the bond market, which has not accepted the Fed median.

141,913 independent construction and contractors are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 12,896 in TX, 12,642 in CA, 11,414 in FL. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

The next decision is at the October 27-28 meeting, followed by December. A speech from one voter does not set the path. The data between now and then does.

Sources: CNBC; Federal Reserve Summary of Economic Projections; FOMC statement, Sept. 16, 2026; U.S. Treasury. Loan arithmetic is illustrative. This is market information, not investment advice.