Fed Lowering Rates Hinges on Jobs

Mitchell Barnes, Labor Economist at the Conference Board, discusses his outlook for the US labor market and how the numbers will affect the Fed's next decision on rates.

Federal Reserve Bank of New York President John Williams said the US central bank’s policy meeting next month would be a “live” one, hinting at the possibility of an interest-rate move without saying what course of action he would support.

“I definitely think that every meeting is, from my perspective, live,” Williams said Wednesday in a CNBC interview. “We’re getting the risks more in balance,” he said, referring to the Fed’s two mandates of maximum employment and stable prices.

Investors are betting on an interest-rate cut at the central bank’s September meeting after Fed Chair Jerome Powell said Friday that “downside risks to employment are rising,” and “the shifting balance of risks may warrant adjusting our policy stance.”

Williams said the current level of rates is “modestly restrictive,” which means the Fed could “reduce interest rates and still be somewhat restrictive going forward, but again, we’re going to have to figure out exactly what’s happening in the economy.”

Read More: Powell’s Jackson Hole Signal on Rates Seen as Good for One Cut

The New York Fed chief said unemployment remains low, with some indicators like hiring pointing to a gradual cooling, though wage growth remains consistent with “a solid labor market.” Inflation, on the other hand, is coming down “pretty slowly.”

Fed officials are facing mounting political pressure after President Donald Trump announced this week he was firing Fed Governor Lisa Cook following allegations by the administration that she had engaged in mortgage fraud. Cook’s lawyer has said they will fight the decision in court.

Williams declined to comment on the specifics of the case. He said Cook has “always brought integrity and a commitment to the Federal Reserve’s mission.”

He added that central bank independence has “proven to be valuable around the world.”

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals