New York Federal Reserve President John C. Williams said he supports more interest rate cuts this year to protect a softening labour market, even though inflation has risen above the Fed’s 2% goal in recent months.
In an interview with The New York Times, Williams said the economy is not near recession but signs of slowing job growth and cautious corporate hiring justify attention. As a permanent voting member of the FOMC and close ally of Chair Jerome Powell, his stance carries weight within the Fed.
Williams argued the central bank has room to support employment because inflation pressures from President Trump’s tariffs are likely to fade. He expects inflation to rise toward 3% while unemployment edges above 4%, conditions under which modest rate cuts could help steady the economy.
Despite the government shutdown delaying key data such as the jobs and CPI reports, Williams said the Fed could still act, relying on private surveys and internal indicators. He described monetary policy as “modestly restrictive” and said the goal is to bring rates back to a neutral level around 3%.
Williams defended the Fed’s independence amid ongoing political pressure, saying its focus remains on achieving both price stability and maximum employment. He dismissed criticism of the Fed’s past asset purchases, noting they helped avoid a deeper downturn.
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Williams’ remarks reinforce expectations for additional Fed easing this year. His focus on labour-market fragility over short-term inflation risks suggests a cautious policy bias, though ongoing political scrutiny could test Fed independence.
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