Federal Reserve's 'Third-in-Command' Advocates Further Rate Cuts: Prioritizing Employment Over Inflation

BlockBeats News, October 9 — Federal Reserve's third-in-command and New York Fed President John Williams stated that he supports further rate cuts this year, despite inflation deviating from the Fed's 2% target in recent months. His reasoning centers on the cracks emerging in the labor market, and Williams hopes to prevent these cracks from deepening further. On Wednesday, Williams told *The New York Times* in an interview that he does not believe the economy is on the brink of recession. However, he pointed out that the slowdown in monthly job growth, coupled with other signs indicating businesses are becoming more hesitant in hiring, warrants attention. Currently, the Fed faces a dilemma. On one hand, Fed officials do not want to exacerbate the slowdown in the labor market. On the other hand, they also aim to avoid unintentionally fueling inflation, as U.S. President Trump's tariffs have already caused inflation to accelerate again. Williams stated that the Fed has the flexibility to support the labor market because the inflation outlook does not appear as severe as it did earlier this year. Williams noted that while Trump's tariffs have indeed driven up the prices of certain consumer goods, he expects the impact of tariffs on inflation to diminish over time, even though new import taxes have been imposed on products like furniture and pharmaceuticals. Williams said, "The risk of further slowdown in the labor market is a matter of great concern to me." He later added that if the economy develops as expected, with inflation rising to around 3% and unemployment slightly above the current 4.3%, he would support "rate cuts this year, but we need to clearly understand what this truly means." Williams emphasized 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.