Financial Associated Press, October 11th - New York Federal Reserve President John Williams recently stated that given a better balance between achieving inflation and employment goals, policymakers should gradually lower interest rates to a more neutral level "over time."

On Thursday (October 10th local time), the New York Fed published Williams' speech on its official website. Williams stated at an event at Binghamton University that he believes U.S. inflation is moving towards the central bank's 2% target.

Williams mentioned that the labor market has cooled down in the past year but remains stable, which should provide room for the Federal Reserve to adjust interest rates to a level that will neither pressure the economy nor stimulate it.

"Looking ahead, based on my current economic outlook, I expect that gradually shifting monetary policy towards a more neutral stance over time will be appropriate."

"As progress is made towards achieving price stability goals, transitioning to a more neutral monetary policy stance will help maintain a robust economy and labor market."

Last month, the Federal Reserve initiated a monetary easing cycle by taking a 'first aggressive step' - cutting interest rates by 50 basis points instead of the more traditional 25 basis points, lowering the target range for the federal funds rate from 5.25% - 5.5% to 4.75% - 5%.

After the meeting, many central bank officials also expressed their views, generally believing that after a significant rate cut, the Federal Reserve should indeed gradually reduce interest rates. However, the meeting minutes released overnight showed that officials had significant differences in the extent of rate cuts at the meeting.

As the 'number three' at the Federal Reserve and Vice Chairman of the Federal Open Market Committee (FOMC), Williams pointed out that current inflation is generally low, and various labor market indicators also indicate that labor is unlikely to be a source of price pressure.

Earlier in the day, data released by the US Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose by 2.4% year-on-year in September, while the core index recorded a 3.3% year-on-year increase, both exceeding market expectations by 0.1 percentage points.

However, some economists pointed out that based on disaggregated data, the Federal Reserve's favored inflation indicator - Personal Consumption Expenditures (PCE) - is likely to show a more moderate increase, or prove that the trend of prices continuing to converge towards 2% remains unchanged.

Williams said: 'We still have a ways to go to reach our 2% target, but we are definitely moving in the right direction. The data paints a picture of an economy that has regained balance.'

Editor/ping