New York Fed president advocates for benchmark rate cut Amid slowing inflation

John Williams, the president and chief executive officer of the Federal Reserve Bank of New York, has called for a reduction in the Federal Reserve's benchmark interest rate, citing the steady decline in US inflation toward the Fed's 2 per cent target. 

Speaking at a Council on Foreign Relations event, Williams argued that the current economic conditions—characterized by balanced growth and easing inflation—warrant a loosening of monetary policy through a rate cut, Caliber.Az reports via Russian media.

Williams' comments come just before the release of the August labor market report, which revealed a slower-than-expected increase in job growth. The US Labor Department reported a rise of 142,000 jobs in August, down from the initially reported 114,000 for July, which was later revised to 89,000.

Additionally, job figures for June were revised downward by 61,000, leading to a total reduction of 86,000 jobs over the two months.

The unemployment rate dropped to 4.2 per cent in August from 4.3 per cent in July. Following these developments, traders' expectations for a 50 basis-point cut in the Fed Funds rate in September have increased, with the probability rising to 55 per cent from 40 per cent the previous day, according to CME FedWatch.

Williams did not specify the potential size of the rate cut but indicated that a reduction to a “more neutral level”—neither constricting nor stimulating economic activity—might be appropriate. He also noted that the reduction of the Fed's balance sheet is progressing as planned and is expected to continue.

Williams emphasized that future Fed actions will be guided by ongoing economic data, forecasts, and risk assessments.