Fed's Williams Talks About Cooling Labor Market, Cautious About September Rate Cut Expectations

According to TechFlow news on August 2, citing Jin10 data, Fed officials and Powell ally Williams stated, "The labor market conditions I have observed over the past year can be described as 'moderate and gradual cooling,' but overall it remains robust." Although the unemployment rate slightly rose to 4.2% in July (up from 4.1% in June), the relatively weak US Non-farm Payrolls (NFP) data provided room for Powell to push for a consensus on interest rate cuts. Williams pointed out that the significant downward revision of employment growth data for May and June is the real focus of this report. He stated, "This information is crucial and helps us understand the trends in labor supply and demand, as well as the cooling trend of labor market momentum." Regarding the possibility of an interest rate cut in September, Williams was cautious and did not endorse the market's expectation of an 80% chance of a cut. He said, "The challenges faced by market participants are the same as those we face as policymakers. I believe the market's reaction to signals is understandable." Williams expects the US economic growth rate to slow to about 1% this year, but he believes the economy is expected to rebound in 2026.