Fed's Williams Backs Rate Hikes if Core PCE Tops 0.2% as AI Demand Stokes Inflation
Updated
Updated · investinglive.com · Jul 13
Fed's Williams Backs Rate Hikes if Core PCE Tops 0.2% as AI Demand Stokes Inflation
3 articles · Updated · investinglive.com · Jul 13
Summary
0.2% monthly core PCE is Williams' threshold for staying confident disinflation is intact in the second half; anything higher would, he said, warrant a monetary policy response.
AI-driven demand is his main concern because the Fed can look through temporary energy and tariff price shocks, but not a sustained demand boost that keeps inflation above supply.
0.34% is the average monthly core PCE so far this year, already well above Williams' benchmark and reinforcing the risk that inflation proves more persistent.
33% odds of a July hike and 70% for September show markets still see July as a high bar, though an upside core CPI surprise could lift expectations and even produce hawkish dissents.