New York Fed’s Williams says it's 'reasonable' to expect another rate hike by year-end

It would be "reasonable" to expect another interest rate hike from the Federal Reserve by the end of the year, New York Federal Reserve President John Williams said on Thursday.

Williams said investor sentiment suggests that "it's likely that another rate hike may be appropriate by the end of the year."

"That seems to me a reasonable way of thinking about it. But we have to see. We're going to collect the data and do what we did between July and September," he said.

Williams also said the time for explicit forward guidance was "over," echoing the approach of Fed Chairman Kevin Warsh, who has said the central bank will refrain from directly signalling to the market what it intends to do at coming meetings.

He was speaking at the London Macro Policy Forum.

The Federal Reserve raised its benchmark interest rate by a quarter percentage point earlier this month, taking the overnight funds rate to a target range of 3.75%-4%.

Commentary from Warsh and from other central bank officials following that decision has fueled market expectations that another hike will follow in the coming months. CME Group's FedWatch tool put the probability of an October raise at 77.5% on Thursday, up from around 53% on Wednesday.

Recent data suggests the U.S. economy remains strong while inflation remains above 3%.

Boston Federal Reserve President Susan Collins on Wednesday warned there was "an increased likelihood" that inflation will stay "notably" above the Federal Reserve's 2% target.

Fed Governor Michael Barr said Wednesday that "further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion."