(Reuters) -Federal Reserve Bank of New York President John Williams backs more interest rate cuts this year given the risk of a further slowdown in the labor market, he said in an interview published by the New York Times on Thursday.
However, Williams, who serves as the vice chair and a permanent voting member of the rate-setting Federal Open Market Committee, added that the slowing of the labor market did not point to an imminent recession.
"My own view is that yes, we would have lower rates this
year, but we’ll have to see exactly what that means," Williams told the newspaper.
"The risk that inflation got well above 2% and we didn't bring it back down would be very damaging to the economy and to our credibility. But we need to do it in a way that does our best to minimize the risk of the labor market cooling more sharply."
The Fed cut its rate by a quarter percentage point at its September meeting, a move Fed Chair Jerome Powell and others characterized as a way to leave policy tight enough to still restrain the economy and put downward pressure on inflation, while also providing a looser outlook that could help ensure against rapid weakening of the job market.
Williams' comments are in line with the minutes of the September 16-17 Fed session published on Wednesday.
According to the minutes, Fed officials last month agreed that risks to the U.S. job market had increased enough to warrant an interest rate cut, but they remained wary of high inflation at a time of debate about how much borrowing costs were weighing on the economy.
The Fed's next policy meeting is slated for October 28-29, with another quarter-percentage-point rate cut anticipated by financial markets.
In the interview, Williams also said he cared deeply about the independence of the Fed, in the context of ongoing uncertainty over the Fed's status amid President Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook and his pressure on the central bank to slash rates.
(Reporting by Shubham Kalia and Nilutpal Timsina in Bengaluru; editing by Sharon Singleton, Hugh Lawson and Mark Heinrich)
