Senior official of the Federal Reserve sends another signal to lower interest rates! Williams said the September meeting will make "real-time" decisions, and the balance of risks has shifted.

New York Federal Reserve Bank President John Williams said on Wednesday that the upcoming Federal Reserve policy meeting will be a "meeting full of uncertainties," suggesting a possible adjustment to interest rate policies, but without a specific direction. He emphasized in an interview that the Federal Reserve has always aimed to achieve full employment and price stability, and the current "risk balance has shifted." This statement is in line with the remarks made by Federal Reserve Chairman Jerome Powell last Friday. Powell indicated at the time that the downside risks to the U.S. job market have significantly increased, and said that "the change in risk balance may require an adjustment in policy stance," directly raising market expectations for a rate cut in September. Williams further explained that the current federal funds rate is at a "moderately restrictive" level, which means that the Federal Reserve has room to lower interest rates while maintaining policy flexibility. "We may need to lower interest rates, but we will still maintain a certain degree of restrictive stance in the future," he said. "The key is to accurately assess the actual situation of the economy." It is worth noting that Federal Reserve officials have recently been sending out signals of a policy shift, reflecting a shift in institutional assessment of the economic outlook from "anti-inflation" to "anti-recession." The market generally expects that if the August nonfarm payroll data continues the weak trend observed in July, the Federal Reserve may initiate a rate-cut cycle at the September monetary policy meeting. There is a clear division within the Federal Reserve on the path of rate cuts. Stephen Stanley, chief U.S. economist at Santander Bank, pointed out that some officials advocate for multiple rate cuts, while another group supports a single adjustment, and some members oppose any rate cut action. He predicts that the September meeting might reach a consensus of "cut once and observe." Matthew Luzzetti, chief economist at Deutsche Bank, believes that considering the dual risks of inflation and employment, the Federal Reserve is more likely to adopt a "gradual rate cut" approach. Policymakers may start cutting rates in September, with subsequent actions strictly dependent on economic data performance. This divide is clearly visible in public statements by officials. Atlanta Fed President Bostic supports a "wait-and-see" strategy, while Cleveland Fed President Mester explicitly stated that she would not vote for a rate cut at this week's meeting, and Kansas City Fed President Schmieding did not rule out the possibility of a rate hike. Powell's speech at the Jackson Hole symposium highlighted the policy dilemma: acknowledging the increasing risks in the labor market on one hand, and warning that the inflationary pressures from tariffs may persist on the other. He emphasized that policy adjustments should be based on "imperfect information," taking action before the data becomes clear. As the September meeting approaches, the Federal Reserve will release its latest economic forecasts. June data showed that most officials supported at least two rate cuts by the end of the year, but some members believed the rates should remain unchanged by 2025. The confirmation process for new Senate-appointed member Milan to the White House Economic Advisory Committee may further impact the committee's decision-making dynamics. Keith Bresnahan, chief economist at RSM, pointed out that the current biggest challenge lies in balancing the dual goals of price stability and maximum employment. If employment data continues to deteriorate or inflation rebounds, the Federal Reserve may be forced to adopt a strategy of "one-time adjustment" rather than continuous rate cuts. Minneapolis Fed President Kashkari emphasized that proactive policy adjustments may be preferable to passive responses before substantial deterioration in the labor market occurs. He warned that if weak employment evolves into a recession, its impact will be more severe than the uncertainties caused by tariffs.