10.13.2026 - Forward Guidance Was Only Napping

“With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information. If the economy evolves in a manner broadly consistent with my forecast, one further upward adjustment of the federal funds target range may be appropriate late this year to support a timelier return of inflation to target.”

- John Williams, New York Fed President (on September 29)

Just prior to these remarks at the University at Buffalo at 2pm Eastern, the odds were around 70% for a 25-basis-point tightening at the October 27-28 meeting. An hour later, the odds shifted to 50/50 (“no need for urgency”). A December tightening remained priced in (“one further upward adjustment…late this year”), as remained the case as of October 6.

The odds are not really the point here—it’s that the markets once again have both economic data AND Fedspeak (from Williams and at least several other FOMC members) as their trusty guides to setting short-term rate expectations.