Federal Reserve "No. 3" Strongly Supports Further Rate Cuts: Prefers Protecting Employment Over Fearing Inflation

BlockBeats News, October 9, the third-ranking official of the Federal Reserve and President of the New York Fed, Williams, stated that he supports further interest rate cuts this year, despite inflation having deviated from the Fed's 2% target in recent months. His reasoning centers around cracks that have already appeared in the labor market, and Williams hopes to prevent these cracks from deepening further.

On Wednesday, Williams said in an interview with The New York Times that he does not believe the economy is on the verge of recession. However, he pointed out that the slowdown in monthly job growth, along with other signs that companies are becoming more hesitant to hire, are causes for concern. Currently, the Federal Reserve is in a dilemma. On one hand, Fed officials do not want to exacerbate the slowdown in the labor market.

But they also hope to avoid inadvertently fueling inflation, as tariffs imposed by U.S. President Trump have caused inflation to accelerate again. Williams stated that the Fed has the flexibility to support the labor market because the inflation outlook does not seem as severe as it did earlier this year. Williams said that Trump's tariffs have indeed pushed up the prices of some consumer goods, but he expects that although Trump has imposed new import taxes on products such as furniture and pharmaceuticals, the impact of tariffs on inflation will diminish over time.

Williams said: "The risk of a further slowdown in the labor market is something I am very concerned about." He later added that if the economy develops as expected, with inflation rising to around 3% and the unemployment rate slightly above the current 4.3%, he would support "a rate cut this year, but we have to be clear about what that really means." Williams stated that even if a government shutdown leads to a lack of official data, he would not abandon his willingness to take action at the upcoming Fed meeting because of it.