Federal Reserve Bank of New York President John Williams suggested that further rate cuts will be appropriate over time, aligning with Chair Jerome Powell’s outlook for gradual reductions.
Williams told the FT:
"I personally expect that it will be appropriate again to bring interest rates down over time,"
"Right now, I think monetary policy is well positioned for the outlook, and if you look at the SEP [Summary of Economic Predictions] projections that capture the totality of the views, it's a very good base case with an economy that’s continuing to grow and inflation coming back to 2 per cent."
After September’s larger-than-usual half-point rate cut, the Fed appears set to follow a more measured approach in the coming months as economic data continues to support growth and inflation moderation.
The latest payrolls report strengthened expectations of a quarter-point rate cut in the near term, with traders pricing in a high probability for November.
Williams' comments highlight how the Fed is walking a fine line—supporting the economy while making sure it doesn’t cut rates too quickly and spark inflation again.
