Federal Reserve Bank of New York President John Williams indicated on Friday that the central bank may soon lower interest rates, citing cooling inflation and a slowing labor market as key reasons for a potential policy shift.

Speaking after the release of the August jobs report, Williams said that recent economic data supports a move toward easing monetary policy. “With the economy now in balance and inflation heading toward our 2% target, it makes sense to begin reducing the target range for the federal funds rate,” Williams stated.

The August jobs report showed U.S. employers added 142,000 jobs, falling short of expectations, while the unemployment rate dropped slightly to 4.2% from 4.3%. Despite fewer jobs added, Williams described the numbers as consistent with a “slowing economy” and a “cooling off in the labor market.” He projected the unemployment rate could end the year around 4.25% before declining to a longer-term rate of 3.75%.

The comments come amid growing debate within the Fed about the appropriate stance on monetary policy. Fed Chair Jerome Powell recently emphasized that while inflation remains a concern, the central bank does not want to see further deterioration in the job market.

Williams’ remarks suggest a shift toward balancing the Fed’s dual mandate of price stability and maximum employment. “The risks to our two goals are now in better balance,” he said, hinting that rate cuts could be on the horizon depending on future economic data.

Williams did not specify the scale or timing of potential rate cuts, but his comments mark a notable shift in the Fed’s recent policy narrative, which has focused primarily on curbing inflation.