12:19 PM EST, 11/21/2025 (MT Newswires) -- The Federal Reserve can afford to further reduce interest rates to support a weakening labor market, New York Fed President John Williams said Friday.

Williams said that downside risks to employment have risen, with both labor demand and supply slowing over the past year.

On Thursday, delayed government data showed the US economy added more jobs than projected in September, though the unemployment rate hit the highest level since 2021.

Williams voted in favor of the two most-recent interest rate cuts of 25 basis points each.

"I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions," he said in prepared remarks for a speech in Chile. "Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals."

The Fed's goals are to achieve maximum employment and price stability.

The probability that the Federal Open Market Committee will lower rates by 25 basis points next month surged to 75% on Friday from 39% on Thursday, according to the CME FedWatch tool. The odds of rates remaining unchanged plunged to about 26% from 61%.

The September jobs report suggests "that the labor market was continuing to slow as the autumn began, but it wasn't ringing any 'we're behind the curve' alarm bells at the Fed," Michael Gregory, deputy chief economist at BMO, said in a note on Thursday. "And the big question for the central bank is: What has happened in the labor market since?"

Williams said that upside inflation pressures have eased somewhat.

His remarks come as the FOMC appears to be divided over the next monetary policy action amid high inflation and a weak labor market.

On Thursday, Fed Governor Michael Barr said policymakers "need to be careful and cautious now" about interest rates, with inflation still running a full percentage point above the Fed's 2% objective, according to a Bloomberg News report.

Also on Thursday, Cleveland Fed President Beth Hammack separately said that monetary policy easing risks prolonging the period of already-high inflation.