01:13 PM EDT, 09/06/2024 (MT Newswires) -- It is now "appropriate" for the Federal Reserve to start easing its monetary policy, New York Fed President John Williams said Friday, while Governor Christopher Waller separately said it is "important" to begin the easing process later this month.

The central bank's Federal Open Market Committee increased its benchmark lending rate by 525 basis points between March 2022 and July 2023 in a bid to combat inflation, but has since held monetary policy steady, with its latest pause coming late in July 2024.

"With the economy now in equipoise and inflation on a path to 2%, it is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate," Williams said in remarks prepared for delivery at the Council on Foreign Relations in New York City. "Labor market conditions have eased from being exceptionally tight."

As the New York Fed's head, Williams serves as a permanent voting member of the FOMC.

Last month, Fed Chair Jerome Powell said the "time has come" to start easing monetary policy, though the timing and extent of rate cuts will depend on incoming data. On Wednesday, Atlanta Fed President Raphael Bostic said the FOMC cannot afford to wait for inflation to drop to 2% before starting to cut rates as that would risk "labor market disruptions."

On Friday, official data showed the US economy added fewer jobs than expected in August, while the unemployment rate ticked down. Williams' remarks were prepared based on data available as of Thursday.

The odds of a 25-basis-point interest rate cut on Sept. 18 jumped to 73% Friday from 60% Thursday, while the probability of a more aggressive 50-basis-point reduction fell to 27% from 40%, according to the CME FedWatch tool.

Waller said Friday that "the time has come" to lower the policy rate on Sept. 18 amid continuing progress on inflation and moderation in the labor market. "It is likely that a series of reductions will be appropriate," Waller said in remarks prepared for delivery at the University of Notre Dame, Indiana, adding that deciding on the pace of rate cuts will be challenging.

"Today's jobs report continues the longer-term pattern of a softening of the labor market that is consistent with moderate growth in economic activity," Waller said. "I do not believe the economy is in a recession or necessarily headed for one soon."

Williams expects 2024 gross domestic product growth between 2% and 2.5%, with the unemployment rate seen at 4.25%. He projects overall personal consumption expenditure inflation to moderate to around 2.25% in 2024 and be near 2% next year. However, the prospects of a "significant further weakening" in the US labor market, a notable slowdown in global growth, and a potentially bumpy disinflation process pose uncertainties, he said.