New York Fed President John Williams said Wednesday that U.S. inflation is cooling gradually and that interest rates are currently in a good place to balance employment and price stability. His comments set a cautious, neutral tone ahead of the Federal Open Market Committee (FOMC) meeting on September 15–16, while leaving the possibility of a rate hike unresolved. Williams said recent data has been encouraging, with tariff effects receding and energy-price increases linked to the Middle East conflict not yet clearly spreading to other service sectors. He identified tariffs, energy costs and residual services inflation as the main pressures, while noting that inflation expectations remain contained and the labor market is stable and solid. The Fed has held rates steady for five consecutive meetings this year, although three voting officials supported a 25-basis-point increase at the July meeting. Officials will receive new inflation data next week, with public comments ending this Friday before the decision and Governor Christopher Waller scheduled to speak the following day. Williams also attributed higher long-term Treasury yields mainly to U.S. economic strength and heavy investment in artificial intelligence, data centers and technology, rather than solely to inflation concerns. He estimated the neutral rate (the level that neither stimulates nor restrains the economy) at around 1%, but said there is not yet enough evidence that productivity gains have raised it.