In a recent discussion with the Financial Times, John Williams, President of the New York Federal Reserve, made it clear that the September interest rate cut of 50 basis points shouldn’t be viewed as a firm guideline for future decisions. Regarded as one of the “big three” at the Fed, Williams expressed confidence that the U.S. economy is well-positioned for a soft landing.

Williams referred to the September employment report as “very good,” highlighting that the economy remains strong even after more than a year of high interest rates. He noted that inflation is continuing to moderate, which he views as a positive development. As a voting member of the Federal Open Market Committee (FOMC) and a close supporter of Fed Chair Jerome Powell, Williams plays a crucial role in shaping monetary policy.

During their conversation on October 7, he stated, “The current stance of monetary policy is in a good place, balancing the strength of the economy and labor market while also observing inflation steadily moving toward 2%.”

He pointed to the positive employment report as a factor that dampened market expectations for another 50 basis points cut following the November elections. Williams reiterated that the September rate cut was “appropriate then and remains correct now,” given the evidence of moderating inflation and a cooling labor market.

Williams elaborated, “As the Chair has indicated, calibrating policies to remain restrictive while still applying downward pressure on inflation is reasonable, albeit at a much reduced force. I want to avoid seeing a weak economy; I hope to sustain the strong performance we see in the economy and labor market.”

When asked about the Fed’s plans for future rate cuts, Williams noted that the latest projections suggest one more cut in each of the remaining meetings this year, describing this scenario as “a very good baseline.” He emphasized that any decisions made will be data-driven rather than following a predetermined course, echoing Powell’s views.

Williams also discussed various inflation scenarios, indicating that if inflation decreases more rapidly than anticipated, “this would necessitate a quicker normalization of policy,” while a stagnation in inflation might call for a more gradual approach to rate cuts.

In addition, St. Louis Fed President James Bullard spoke at an event on the same day, suggesting that the combination of easing high rates and strong productivity growth signals a soft landing for the U.S. economy. He noted that the timing and extent of any future rate cuts will depend on new economic data and the Fed’s ability to balance its dual mandate of price stability and maximum employment. However, Bullard cautioned that if inflation proves to be more severe or accelerates unexpectedly, the number of further cuts could be “fewer or even none,” underscoring the need for patience in policy adjustments.