New York Federal Reserve Chairman Williams said that now it is appropriate for the Federal Reserve to cut interest rates in view of the decline in inflation and progress in cooling the labor market.

Williams said that the Federal Reserve has made significant progress in maintaining price stability and full employment, and the risks of achieving these two goals have turned into a "balance", that is, a balanced state.

Williams said in a prepared speech at an event hosted by the Council on Foreign Relations on Friday.

"With the economy now in a balanced state, inflation is moving towards the 2% target, and now is the time to reduce the degree of policy stance restrictions by lowering the target range for the federal funds rate."

The statement was made after the latest data showed that US employers added 0.142 million jobs in August, and the revised employment figures for July were 0.089 million. The unemployment rate fell to 4.2%.

Nick Timiraos, a journalist from The Wall Street Journal, known as the "Fed horn", said that the non-farm payrolls report may provide clear signals about the magnitude of the Fed's first rate cut, whether it is 25 or 50 basis points, and market pricing will immediately rise to 90%. However, this non-farm payrolls report did not address the issue well, and the market pricing for a 25 or 50 basis point rate cut is "half open". Overall, the non-farm data is not bad enough to change the benchmark expectation for a 50 basis point rate cut, but considering the revised data, it is not convincing enough to completely dispel speculation about a larger rate cut.

Interest rates traders have adjusted their previous bets and now believe that there is a higher chance of a 25 basis point rate cut by the Federal Reserve in September than a 50 basis point cut.

The Fed is expected to begin lowering its key interest rates from a 20-year high at the next policy meeting on September 17-18. Fed Chairman Powell clearly stated last month that the Fed is neither seeking nor welcoming further cooling of the labor market.

Officials have been emphasizing in recent weeks that after years of focusing on inflation, they are closely monitoring the employment situation. At the same time, price pressures continue to ease.

The New York Fed president expressed more confidence in inflation continuing to move towards the Fed's 2% target, and added that the labor market is unlikely to be a source of inflation pressure in the future.

Williams stated, "The risks to our two objectives are now in better balance, and policy needs to adjust to reflect that balance." He described the downward trend in inflation as a widespread and clear trend in the data.

Williams stated that he expects the Fed's preferred inflation measure, the PCE price index, to drop to around 2.25% this year and approach 2% next year.

With the Fed's interest rate cut this month almost certain, a key question facing the bank is how much the interest rate cut might be, and what the pace of rate cuts will be thereafter.

Although Williams did not disclose the size of the Fed's first interest rate cut, he stated that officials may adjust policy towards neutrality over time, a position aimed at neither promoting nor restricting economic activity, "depending on the evolution of the data, outlook and the risks to achieving our goals."

Powell also stated last month, "The timing and pace of the rate cuts will depend on the latest data, evolving outlook, and risk balance."