Fed’s Williams Signals December Rate Cut as Markets Seek Direction

Markets found a moment of clarity on Friday after New York Federal Reserve President John Williams indicated that a rate cut at the upcoming December meeting is now a likely option. His comments offered traders a rare policy signal at a time when the government shutdown continues to block critical economic data, leaving both investors and policymakers navigating with limited visibility.

Williams emphasized that the Fed is prepared to act if the labour market shows further signs of cooling or if inflation continues drifting lower — even if official data remains delayed. The remarks were enough to tilt market expectations toward renewed easing, reversing part of the week’s earlier risk-off sentiment.

Equities responded cautiously but positively, with tech and rate-sensitive sectors showing the strongest rebound. Treasury yields edged lower as traders repriced the path of monetary policy, while the U.S. dollar softened slightly against major peers. Still, volatility remained elevated as markets digested the broader implications of Williams’ signal: the Fed may need to rely more heavily on alternative or private-sector indicators until the shutdown ends.

For traders, the key takeaway is that policy uncertainty may ease slightly — but only if additional Fed speakers echo Williams’ tone and if shutdown negotiations show progress. Until then, markets remain vulnerable to sharp swings driven by shifts in rate-cut expectations and the ongoing absence of official economic data.