Speaking with CNBC's "Squawk Box" from the New York Fed's headquarters in lower Manhattan, Williams said he's continuing to assess the economic figures and isn't ready to declare whether policy is already restrictive enough or if further tightening will be required. He emphasized that the Fed needs a broader run of information rather than relying on just a month or two of readings.
Treasury yields have climbed to multiyear highs, especially on longer maturities where investors factor in inflation and growth expectations. Williams characterized the move as being driven largely by solid economic prospects, noting that strong fundamentals - including sizable investments in technology such as AI and data centers - are influencing financial conditions rather than the other way around.
With yields moving higher, CME Group's measure showed traders boosting the probability of a Sept. 15-16 meeting rate increase to about 66% as of Wednesday morning. Williams did not commit to a move and stressed that he is still processing the latest data. He also said inflation expectations remain well anchored even as this year's price increases have been tied to factors such as tariffs and the conflict involving Iran. As president of the New York Fed, he is a permanent voter on the Federal Open Market Committee.
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The broader message from Williams: markets are reflecting confidence in economic growth while the Fed keeps policy decisions data-dependent.