Fed's "Third-in-Command": Labor Market Faces Slowdown Risk, Supports Further Rate Cuts This Year

　　On Wednesday local time, the Federal Reserve's "third-in-command," New York Fed President John Williams, stated that given the risk of the labor market cooling further, he supports continuing interest rate cuts within the year.

　　During a media interview that day, Williams said, "My personal view is that the policy rate will indeed be lowered further this year, but the specific extent will still depend on the data."

　　He pointed out, "If inflation were to rise significantly above 2% again and we fail to bring it back to the target range, it would cause serious harm to the economy and our credibility. But we need to achieve this goal in a way that minimizes the risk of a sharp cooling in the labor market as much as possible."

　　Williams' remarks come at a critical moment for the Fed, as the central bank currently faces a balancing act between "dual risks": on one hand, it does not want overly tight policy to further drag down the job market; on the other hand, it must avoid reigniting inflation by easing too much. In recent months, due to the Trump administration's imposition of tariffs, U.S. inflation has resurfaced. The farm employment report has been forced to delay, and if Congress still fails to reach an agreement, the Consumer Price Index (CPI) may also not be released as scheduled next Wednesday.

　　Williams直言, official data, while the "gold standard for macroeconomics," are supplemented by private indicators such as the New York Fed's internal surveys, the Institute for Supply Management (ISM), and The Conference Board, which "are sufficient to outline the key contours of the economy," especially the dual mandates of "maximum employment and price stability."

　　However, Williams holds a different view, noting that the slowdown in the job market helps curb inflation, even though service sector price pressures remain stubborn. He also emphasized that the U.S. stock market does not accurately reflect the degree of monetary policy tightening, with some of the gains reflecting investor speculation in areas like artificial intelligence.