On October 9, the Federal Reserve's third-ranking official, New York Fed President Williams, publicly expressed support for another rate cut this year. Although recent inflation has deviated from the 2% target, he is more concerned about the 'cracks' appearing in the labor market and believes timely action is needed to prevent the situation from worsening.
Williams pointed out in an interview with The New York Times on Wednesday that the current economy has not yet fallen into recession, but risks have become apparent: monthly job additions are decreasing, and companies' willingness to hire is cooling; these signals need to be closely monitored. Regarding the balance dilemma faced by the Federal Reserve between 'maintaining employment' and 'controlling inflation,' he stated that while caution is needed regarding the inflationary effects of Trump's tariff policies, the current inflation pressure has eased compared to earlier this year, and the Federal Reserve still has room to act to prioritize stabilizing the labor market.
He further explained that even if Trump subsequently imposes import tariffs on furniture, pharmaceuticals, and other goods, the long-term impact of tariffs on inflation will gradually weaken. At the same time, Williams emphasized: "I am very concerned about further deterioration in the labor market." If the economy develops as expected—inflation rising to around 3% and the unemployment rate above the current 4.3%—he will firmly support interest rate cuts this year, with specific plans needing to be adjusted according to actual conditions. In addition, he clearly stated that even if a government shutdown leads to the absence of official data, the Federal Reserve's subsequent meetings will still make normal decisions, and actions will not be stalled due to data gaps.
