New York Fed President Williams: Supports Further Rate Cuts This Year as Economy Shows Resilience

TradingKey - New York Federal Reserve President John Williams clearly stated on Thursday his support for further interest rate cuts this year, citing growing risks of an accelerating slowdown in the labor market. His comments reinforced market expectations for additional easing at both the October and December Federal Reserve meetings.

Williams noted that while the U.S. economy is not on the brink of recession, the labor market has shown a sustained cooling trend. Over the past year, job openings have declined, quit rates have fallen, and September data indicated a moderate slowdown in employment growth. He argued that if inflation remains stable around 3% and the unemployment rate rises modestly from its current 4.3%, further monetary policy loosening would be appropriate to prevent economic momentum from weakening too much.

On inflation, Williams acknowledged that tariffs implemented under the Trump administration have indeed raised import prices, increasing overall inflation by approximately 0.25 to 0.5 percentage points. However, he assessed the impact as milder and more dispersed than expected, with no significant second-round effects so far. Core inflation, he said, is gradually moving toward the Fed’s 2% target, with notable improvement in housing costs.

Williams emphasized that current monetary policy remains “moderately restrictive”, exerting downward pressure on economic activity — a stance that continues to help bring inflation under control. As wage growth slows and labor supply and demand come into better balance, inflationary pressures in the services sector are expected to ease.

He also reiterated that the future policy path will remain strictly data-dependent, rather than following a preset schedule — a position closely aligned with repeated statements from Chair Jerome Powell.

In response to growing concerns about the Fed’s independence, Williams reaffirmed that central bank decisions are based solely on economic data and are free from political influence. “An independent central bank is better able to achieve the goals the public expects,” he said.

Notably, Williams affirmed his commitment to continue serving: “As long as I’m allowed, I will stay.”

His remarks align closely with market expectations. Federal funds futures indicate that traders are pricing in 25-basis-point rate cuts at both remaining meetings this year. Investors are now turning their attention to upcoming remarks from Powell for further policy signals.