John Williams of the US Fed says interest rates could still be cut in the “near term”.

The US Federal Reserve can still cut interest rates “in the near term” without jeopardizing its inflation target, New York Fed President John Williams said on Friday.Progress on inflation has “temporarily stalled,” Williams acknowledged in comments prepared for a meeting of the Central Bank of Chile, adding that it was “indispensable to restore inflation to our longer-term target of 2% on a sustainable basis,” from a current level he said is around 2.75%.

But he said price pressures are expected to ease as the impact of tariffs ripples through the economy without creating persistent inflation, while the labor market appears to be softening, with the unemployment rate rising to a level of 4.4% in September similar to pre-pandemic years “when the labor market was not overheated.”

The Fed must achieve its inflation target “without creating unnecessary risks to our maximum employment target,” Williams said.

“I view monetary policy as modestly restrictive… Therefore, I still see room for further near-term adjustment to the target range for the Federal Funds Rate to bring the policy stance closer to the neutral range, thereby maintaining the balance between achieving our two objectives.”

The New York Fed has a permanent voting position on the interest rate-setting Federal Open Market Committee. His comments come amid a debate over whether the Fed should cut rates at its Dec. 9-10 meeting, with some policymakers taking a hard line against further rate cuts until it is clear that inflation will fall to the Fed’s 2% target from current, still elevated levels.