Fed in No Rush to Cut Again? Williams Opens Up About His Position
John Williams, President of the Federal Reserve Bank of New York and a member of the FOMC, stated that he sees no urgency for the Fed to immediately cut interest rates again after the one it made last week. He believes the current policy is "quite appropriate" to suppress inflation while still supporting the slowing labor market.
In his latest interview, Williams emphasized that the Fed now has room to be more patient and wait for data before taking further action. This message was interpreted by the market as a signal that the Fed is unlikely to accelerate further cuts anytime soon, unless the data provides a compelling reason.
Williams' statement comes amid changing market expectations after US inflation weakened. Recent data showed the US CPI fell to 2.7% in November—lower than expected—while the market is also monitoring whether this slowdown in inflation is consistent enough to encourage further policy easing.
However, the market also assessed that this inflation release was not entirely "clean" because the previous US government shutdown had disrupted data processing, leading some market participants to wait for confirmation from the next set of indicators. This situation also explains why Williams's "take your time" comments immediately attracted attention.
In terms of mandate, the Fed's stance remains broadly the same: to keep inflation moving toward its long-term target of 2%, while paying attention to risks to employment. In the latest FOMC statement, the Fed also highlighted the still-high uncertainty in the outlook and noted that risks to employment have increased in recent months.
Furthermore, market participants await data that could influence the direction of the dollar and interest rates, including the University of Michigan consumer sentiment. Such data often provides clues about the strength of household spending and inflation expectations, which ultimately shape the Fed's actions.
In short, Williams' message today "hit home": inflation may be cooling, but the Fed isn't automatically going to cut rates further. The market is now in a more selective mode—weighing whether the next data is strong enough to shift the Fed's stance from "wait" to "move."
Source: Newsmaker.id
