Federal Reserve's "Big Three" Strongly Support Further Interest Rate Cuts: Prioritizing Employment and Unfazed by Inflation

October 9th - The President of the New York Fed and a top Federal Reserve official, Williams, expressed his support for further interest rate cuts this year. Despite months of inflation being below the Fed's 2% target. His reasoning centers around the cracks that have emerged in the labor market. And Williams hopes to prevent these cracks from deepening further. On Wednesday, in an interview with The New York Times, Williams mentioned that he believes the economy is not on the verge of a recession. However, he noted that monthly job growth has slowed and other signs indicate hesitation among businesses in hiring. Which are all worthy of attention. Currently, the Fed is in a dilemma. On one hand, Fed officials do not want to aggravate the slowdown in the labor market. But they also want to avoid inadvertently fueling inflation. As President Trump's tariffs have led to a renewed acceleration in inflation. Williams stated that the Fed has the flexibility to support the labor market. As the inflation outlook does not seem as dire as earlier this year. Williams said that Trump's tariffs have indeed pushed up prices for some consumer goods. But he expects the impact of tariffs on inflation to decrease over time. Despite Trump imposing new import taxes on products such as furniture and pharmaceuticals. Williams said, "The risk of further slowing in the labor market is a key concern for me." He later added that if the economy evolves 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 need to be clear about what this really means." Williams stated that even though the government shutdown has led to the absence of official data. He will not refrain from taking action at the upcoming Fed meeting.