The President of the Federal Reserve Bank of New York, Williams, recently signaled new policy cues. This key figure within the Fed expressed optimism about the U.S. economy's performance through 2026 but stated that there is no need to cut interest rates in the short term.

From his latest remarks, the Federal Open Market Committee (FOMC) has shifted monetary policy from a previously moderate tightening to a stance close to neutral. In other words, the current policy stance can stabilize the labor market while creating conditions for inflation to return to the 2% target.

However, there is a subtle balancing act here. Williams admitted that the core task facing the Fed is to bring inflation back down without harming employment. An interesting development in recent months is that the labor market has started to weaken, with rising risks of employment slowdown; meanwhile, inflationary pressures are easing.

Looking back at last year, the Fed cut interest rates by 0.75 percentage points within a year, and the federal funds rate range was maintained at 3.5% to 3.75%. The judgment at the time was to offset the dual pressures of softening employment and high inflation through rate cuts. By December last year, officials still expected to cut rates again this year, reasoning that the impact of Trump's tariff policies would gradually fade, employment would stabilize, and inflation would also ease.

Reality has proven otherwise. The latest employment data shows that companies are cautious about hiring, and inflation remains high. This explains why Williams explicitly stated in a TV interview last month that there is no "urgent need" to cut rates immediately.

Despite significant downward pressure from some quarters, recent statements from other Fed officials also point in the same direction: the observation period needs to continue.