The Fed clarifies Williams' speech that the market has taken the sign of a rate cut

When New York Federal Reserve Chairman John Williams said central bankers needed to "act quickly" in the face of slowing economic growth, a spokesman said he was inspired to the research, leaving no indication of what could happen at the meeting of the Federal Open Market Committee this month.

"It was an academic talk about 20 years of research, it was not potential political action at the next FOMC meeting," a New York Federal Reserve spokesperson told CNBC.

Earlier, Williams had made a speech at the annual meeting of the Central Bank Research Association, in which he had said: "It is better to take preventative action than to wait for a disaster to happen . "

His comments come as Wall Street expects the US central bank to reduce its key rate during the July 30th and 31st meeting.

Following Williams' earlier remarks, market expectations of a 50 basis point rate cut have jumped to around 59%, according to the WEC Fedwatch tool. Prior to his speech, the forecast for a half-point reduction had hovered between 20% and 30%.

Later, Fed Vice President Richard Clarida told Fox Business News that the rapid reduction in interest rates is a good strategy. Market expectations for a half point reduction have further increased to around 69%.

But after the New York Fed spokesman clarified Williams' comments, expectations of a 50 basis point cut fell to around 50% by 19 hours. Eastern Time.

The Fed is currently setting the overnight rate in a range of 2.25% to 2.5% – above zero, but still below the normal levels that prevailed in the previous phases. economic expansion.

– Fred Imbert and Patti Domm of CNBC contributed to this report.