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A senior Federal Reserve official said the central bank is now “well positioned” for a soft landing for the U.S. economy after September’s sharp halving and signaled support for slowing the pace of rate cuts.
New York Fed President William Williams said September’s “very good” jobs report showed that the U.S. economy remains in strong health even as inflation continues to ease after more than a year of high interest rates. It was confirmed that the
Mr Williams told the Financial Times: “The current monetary policy stance is very good for continuing to see inflation return to 2%, with the hope that the economy and labor market will continue to remain strong. It’s in position,” he said. Monday.
The jobs report could shift expectations for the world’s largest economy, which has been dogged by worries that the Fed’s policy of trying to stamp out the worst inflation in decades by raising borrowing costs could trigger a recession. It’s helpful.
The jobs report also dashed expectations that the Fed will cut interest rates by another 0.5 percentage point at its November meeting shortly after the U.S. presidential election, following the Fed’s decision to begin its first easing cycle in more than four years at a half-point. . It will be reduced to 4.75-5%.
Williams, executive director of the Federal Open Market Committee and a close ally of Fed Chairman Jay Powell, said interest rate decisions were “9 “I was right on the moon,” and “I was right today.” labor market.
“As the Chairman said, it is still restrictive and there are still downward pressures on inflation, but it makes sense to recalibrate policy to a situation where those pressures have been significantly reduced,” he said. ” he said.
“I don’t want to see the economy weaken. I want to maintain the strength we see in the economy and the labor market.”
Asked how aggressively the Fed should continue to cut rates, Williams said the latest “dot plot” of officials’ rate outlook suggests two half-point rate cuts in the remaining two meetings this year. “It’s a very good base case,” he said. He reiterated Powell’s words, saying decisions will depend on data and will not follow a “preset course.”
Williams added that September’s half-point rate cut was not “a rule for future behavior.”
While acknowledging that there may be little precision in his estimates of where interest rates will ultimately settle, Williams said he would set interest rates at a “neutral” setting that would not reduce demand “over time.” He said his goal is to move to .
Williams said if inflation falls even faster than expected, “we’re going to have to normalize policy a little bit faster.” Conversely, if inflation stagnates, “interest rates will fall more slowly.”
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Williams expects the consumer spending price index to approach the Fed’s 2% target next year, but remains wary of shocks such as those originating from the Middle East.
He said the recent rise in oil prices is “definitely on the list of near-term risks to the global economy and inflation.”
Williams dismissed concerns about housing-related inflation, saying inflation turned out to be stronger than expected and helped keep the overall monthly index rising.
“Forward-looking indicators are moving us closer to our goals,” he said.
