Federal Reserve's Williams discusses labor market cooling, cautious approach to September interest rate cut expectations

According to a report by Golden Finance, Fed official and Powell ally Williams said, "The labor market conditions I have observed over the past year can be described as a 'mild and gradual cooling', but overall they are still in a stable state." Although the unemployment rate only rose slightly to 4.2% in July (4.1% in June), the relatively weak non farm payroll data provided room for Powell to push for a consensus on interest rate cuts. Williams pointed out that the real focus of this report is the significant downward revision of employment growth data for May and June. He said, "These pieces of information are crucial in helping us understand the direction of labor supply and demand, as well as the cooling trend of labor market momentum." Regarding the possibility of a rate cut in September, Williams was cautious and did not endorse the market's expectation of a rate cut of up to 80% at one point. He said, "The challenges faced by market participants are the same as those we face as policy makers. I think the direction of the market's response to signals is understandable." Williams predicts that the US economic growth rate will slow down to about 1% this year, but he believes that the economy is expected to rebound in 2026. (Golden Ten)