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The Federal Reserve clarifies Williams' speech that the market is a sign of interest rate cuts



John Williams, President and CEO of the Federal Reserve Bank of New York, spoke before the New York Economic Club, March 6, 2019.

Lucas Jackson | When New York Federal Reserve Chairman John Williams said central bankers should "act quickly" as economic growth slows down, a spokesman said he was drawing on research without hinting at what might happen at the Federal Committee meeting for the open market this month.

"This was an academic speech for 20 years of research, not about potential political action at the forthcoming FOMC meeting," CNBC spokeswoman for the Federal Reserve in New York told CNBC.

Earlier, Williams delivered a speech at the annual meeting. from the Central Bank Research Association, in which he said, "It is better to take preventive measures than to wait for the development of the disaster."

His comments came when Wall Street expects the US central bank to lower its benchmark interest rate in July, 30-31

Following Williams' earlier remarks, market expectations for a 50 basis point drop to about 59 percent, according to CME's FedWatch. Before the speech, half-point estimates were between 20% and 30%.

Later, Fed Vice President Richard Claridha told Fox Business News that diminishing interest is quickly a good strategy. Market expectations for a half-point decrease have even increased to around 69%.

But after the Fed spokeswoman in New York clarified Williams' comments, expectations for a 50 basis point drop dropped to around 50% around 19 hours.

The Federal Reserve now attracts the overnight interest rate between 2.25% and 2.5% above zero, but still well below the normal levels prevailing during past economic extensions.

Imbert and Patti Domm contributed to this report.


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