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(Bloomberg) -- Federal Reserve Bank of New York President John Williams said officials will likely need to lower rates further to move policy to a neutral stance now that risks to inflation and employment have become more balanced.

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But Williams stopped short of saying whether he would back a rate cut when policymakers gather later this month, adding decisions will be made meeting by meeting.

“I expect it will be appropriate to continue to move to a more neutral policy setting over time,” Williams said Monday in remarks prepared for an event with the Queens Chamber of Commerce in New York. “The path for policy will depend on the data. If we’ve learned anything over the past five years, it’s that the outlook remains highly uncertain.”

Neutral is the level at which rates neither stimulate nor hold back economic growth.

Williams said the economy is in a good place and the labor market is solid. Now that demand for workers has cooled and the supply of workers has increased, Williams said it is unlikely that the labor market will add to inflationary pressures in the future.

While inflation is still above the Fed’s 2% target, there are reasons to be confident that it will reach target, Williams said, citing a slowdown in inflation rates for goods and services excluding food, energy and housing.

Fed officials started cutting rates in September after pushing them to a peak of 5.25% to 5.5%, which helped cool inflation pressures off a peak of 7.2% in mid-2022.

But investors in December futures contracts are pricing in some chance of a pause in the cutting cycle after recent data showed sticky service-sector inflation. The personal consumption expenditures price index, minus food and energy, rose 2.8% for the 12-month period ending in October.

In a question-and-answer session following the speech, Williams said he sees rates heading down to more normal levels but it’s not known yet where that is. He also said the inflationary environment had changed since the pandemic and many retailers are now having a harder time passing price increases along to customers.

Williams told reporters after the event there was more data to come before the December meeting, including an update on the jobs report later this week. He said he will factor in the “totality” of the data when making a decision on rates.

The New York Fed chief also said it was appropriate for policy to be “somewhat” restrictive as inflation continues to fall closer to the central bank’s target, but he said policymakers should ease if the economy evolves as he expects.