Wall Street Journal: The Fed is taking steps to cut interest rates

The Wall Street Journal quoted senior Fed officials as saying that if the recent slowdown in inflation continues, a rate cut may be justified in the coming months, but this will not happen at the next central bank meeting at the end of July. In an interview with the Wall Street Journal, John Williams, president of the New York Fed, said that in addition to signs that the US labor market conditions are gradually calming down, the latest inflation data is approaching the decline of the inflation target. Despite these signals, the newspaper confirmed that even if one or two officials push, it is unlikely to reduce interest rates at the July 30-31 meeting. But the statement indicates that if there are no major economic surprises, the central bank may consider a rate cut at its mid-September meeting. Williams emphasized that the US economy is witnessing an easing of supply and demand imbalances in the labor market and the economy as a whole, and pointed out that Fed officials are monitoring these trends.
Williams added that the job market, which was very tight two years ago with more jobs than applicants, has now returned to the levels seen in 2018-2019, when the market was strong. He noted that various inflationary factors such as wage growth are moving toward levels consistent with the 2% inflation target. Williams called this “really remarkable progress” and added that it is part of what they need to see to get inflation back to 2% sustainably.
On the progress in controlling the inflation process, the bank official said that they have witnessed continued progress towards the bank’s 2% inflation target, but he acknowledged that the progress has been irregular as there was very low inflation readings at the end of last year and then an increase in this quarter’s readings. He went on to say that the data for the past two months have been good and that June looks like it will be another good reading for inflation, judging by both the Consumer Price Index and the Producer Price Index, noting that the underlying trend in inflation has now returned to more close to 2%.
However, the bank official said that because inflation could develop one way or another, they should continue to monitor its progress, explaining that he would like to see more data to have more confidence that inflation is moving sustainably toward its 2% target.