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Stock futures gained more than 1.6% following dovish comments from New York Fed President
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New York Fed President John Williams sees room for further rate cut in December as labor market weakness poses greater risk than inflation
“I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,” he said in remarks for a speech in Santiago, Chile. “Therefore, 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.
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Following his comments, the market now sees a 72% probability of a rate cut in December, a significant upgrade from yesterday (30%-40%).
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S&P 500 futures and Nasdaq Composite futures also gained more than 1.6% following his comments.
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On the other hand, Boston Fed President Susan Collins and Dallas Fed President Lorie Logan struck a hawkish tone today.
“I do think mildly restrictive policy is very appropriate right now. And, you know, and that makes me hesitant as I look forward to think about what the next policy moves should be,” Susan Colins said last week.
“With two rate cuts now in place, I’d find it difficult to cut rates again in December unless there is clear evidence that inflation will fall faster than expected or that the labor market will cool more rapidly,” Logan said.
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Williams’ remarks are particularly influential because he serves as FOMC vice chair and is part of the Fed’s informal ‘troika’ of top decision-makers alongside Chair Jerome Powell and Vice Chair Philip Jefferson.