US rates hang in balance

Fed governors' split foreshadows debate at Oct 28-29 policy meeting

- ANN SAPHIR MICHAEL S. DERBY

Fed Governor Michael Barr urged caution about adjusting policy, 'so we can gather further data, update our forecasts, and better assess the balance of risks.'

The influential New York Federal Reserve President John Williams signalled on Thursday he would be comfortable with cutting interest rates again, voicing what appears to be a dominant view at the Fed despite some policymakers' qualms about rising inflation.

“The risk of a further slowdown in the labour market is something I'm very focused on,” Mr Williams told The New York Times in an interview conducted on Wednesday and published a day later. He also said he felt President Donald Trump's trade tariffs were not putting as much upward pressure on inflation as many observers had expected, and he didn't see signs of any added boost ahead.

“I think there are more downside risks to the labour market and employment, and that is something that takes some of the upside risk off of inflation,” he said.

San Francisco Fed President Mary Daly, speaking late Thursday in California, largely echoed Williams' view, saying that with inflation having risen less than feared from tariffs, her focus has shifted more to the labour market.

“We're to a point now where the softening in the labour market looks like it could be more worrisome if we don't risk-manage it,” Ms Daly said. “That interest rate cut we took — and we projected we might take more — those were cuts designed to risk-manage as we move both our inflation goal and our employment goal to a more perfect balance.”