Fed’s John Williams Backs More Rate Cuts This Year Amid Labor Market Concerns

New York Fed President John Williams has shown his support for additional Fed rate cuts this year. The Fed official alluded to the weakening labor market, suggesting it should take priority over upside risks to inflation right now. The crypto market also continues to price in additional rate cuts this year, which has contributed to a recent rally that pushed Bitcoin to a new all-time high (ATH).

John Williams Backs More Fed Rate Cuts This Year

The New York Fed president said during a New York Times interview that he expects lower rates this year, indicating that he would vote in favor of additional cuts. However, he refused to commit to the number of further cuts this year, noting that it will all depend on the data.

John Williams’ support for more Fed rate cuts comes amid concerns of a weakening labor market. The Fed President noted that the shift over the past few months has been on the employment side rather than in the inflation data. He added that he is very focused on the risks of a further slowdown in the labor market.

As CoinGape reported, the FOMC minutes showed that most Fed officials judged it appropriate to make further Fed rate cuts by year-end due to the slowdown in the labor market. This was also what prompted the first rate cut of the year last month, as the recent jobs data showed that the labor market wasn’t as strong as most believed.

Focus Should Be On The Labor Market

In the interview, Williams suggested that their focus should be more on the labor market at the moment. He admitted that inflation was still above their 2% target but that over the past year, they have seen underlying inflation move toward their goal. On the other hand, the Fed president noted that the totality of the data indicates the labor market has cooled over the past year, possibly warranting further Fed rate cuts.

The New York Fed president joins Fed Governors Michelle Bowman and Stephen Miran, who have indicated that their colleagues should be paying more attention to the labor market than to inflation. Miran recently said he is more “sanguine” about the inflation outlook than most of his colleagues, even as he advocates for a series of 50-basis-point (bps) cuts.

Fed’s Mary Daly And Michael Barr Also Comment On Monetary Policy

Speaking at the Silicon Valley Directors Exchange, San Francisco Fed President Mary Daly also echoed Williams’ sentiments, stating that inflation has come in much less than she feared and that her focus has shifted to the labor market. She noted that the September Fed rate cut and the rate cuts they project by year-end are meant to risk-manage the softening in the labor market.

However, Fed Governor Michael Barr, who spoke on the economic outlook at the Economic Club of Minnesota Luncheon, was more concerned about the inflation risks. He stated that the FOMC should be cautious about adjusting monetary policy, warning that the tariffs could create persistent inflation.

CME FedWatch data shows a 94.6% chance that the Fed will cut rates by 25 bps at the October 29 meeting. Meanwhile, there is also a 79.8% chance that they will lower rates again by 25 bps at the December 10 FOMC meeting.