New York Fed President John Williams said rising long-term Treasury yields primarily reflect U.S. economic strength and investment in artificial intelligence, data centers and technology rather than heightened inflation fears or market dysfunction. He said inflation was easing slowly as tariff effects receded, with recent data encouraging but insufficient to establish a trend, and estimated current inflation at about 2.75% to 3%. Williams said tariff and geopolitical pressures, including energy costs linked to the Middle East conflict involving Iran, had not produced significant second-round effects in services, while longer-term expectations remained well anchored. He expects inflation to return toward the Federal Reserve’s 2% target during 2027-2028. Ahead of the Sept. 15-16 Federal Open Market Committee meeting, Williams did not pre-commit to raising or holding the 3.50%-3.75% federal funds target range. Michael Barr offered a more hawkish counterpoint, saying policymakers should raise rates decisively if inflation does not moderate sufficiently. Market expectations for a hike varied across futures and prediction-market contracts.