Fed’s Williams Signals More Rate Cuts to Shield Jobs as U.S. Growth Cools

The head of the New York Federal Reserve said he supports additional interest rate cuts this year to protect the U.S. labor market from slowing momentum, even as inflation remains above the central bank’s target.

In recent remarks, the policymaker emphasized that while the economy is not on the brink of recession, signs of weaker job creation and more cautious business hiring justify renewed policy support. He noted that the Federal Reserve still has space to act, given that inflation pressures linked to tariffs are likely to fade in the coming months.

According to him, inflation could temporarily edge toward 3%, with unemployment rising slightly above 4%. Under such conditions, moderate rate cuts could help steady both hiring and consumer demand, ensuring the economy continues to grow without overheating.

He also pointed out that the Fed is prepared to act even with delays in official economic data caused by the government shutdown, relying instead on private sector surveys and internal indicators. Current policy, he said, remains “modestly restrictive,” and the goal is to bring interest rates back closer to a neutral level near 3%.

Defending the central bank’s independence amid mounting political pressure, he reaffirmed that its dual mission—price stability and maximum employment—remains unchanged. He also rejected criticism of earlier asset purchases, saying they played a vital role in averting a deeper downturn during past crises.

His comments reinforce expectations that the Federal Reserve will ease policy further this year. With labor-market resilience now seen as a top priority, the focus appears to be shifting from battling inflation toward sustaining economic growth. Yet, the ongoing political scrutiny of the Fed could make its next steps even more delicate as policymakers attempt to balance economic stability with public confidence.