Economist: Rate Cut in December Once Again Becomes a High Probability Event, Williams' Speech Sets Major Tone for the Market

BlockBeats News, November 24th, William Williams, President of the New York Fed, an ally of Powell, set a major tone for the market with his speech last Friday, making a December rate cut by the Fed once again a high-probability event. Williams' statement was interpreted as a collective signal from the Fed's top officials, causing a significant market expectation adjustment. Josh Hirt, Senior Economist at Vanguard, pointed out that in his personal view, the Fed will cut interest rates. Williams' stance implies support for a new round of easing by the Fed's three most influential officials—Powell, Williams, and Fed Board Governor Waller. "We believe this is a heavyweight camp that is hard to shake."

The Fed's communication—especially at the highest levels—is rarely accidental. Signals from the top, especially from the Chair, Vice Chair, and the highly influential President of the New York Fed, are carefully weighed: they must convey a clear policy direction while avoiding triggering an excessive market response. This is also why Williams' speech last Friday was of significant importance to the market. In his position, he is one of the members of the Fed's leadership "Big Three," the other two being Chair Powell and Vice Chair Jefferson. When Williams hinted at "the possibility of further rate adjustments in the near term," investors interpreted it as a clear signal released by the leadership: the Fed leadership is inclined to cut rates at least once in the near future, with the most likely timing being the December Federal Open Market Committee (FOMC) meeting.

Following Williams' speech last Friday, the probability of a 25 basis point rate cut by the Fed in December rose to 71.3%, now at 67.3%. The December rate cut bet heated up again, with the probability of a rate cut in December dropping below 30% at one point.