Mary Daly, President of the Federal Reserve Bank of San Francisco, indicated that she expects the US central bank to continue lowering interest rates as inflation cools and concerns grow about the labor market, Bloomberg reports.
Speaking at the Wall Street Journal’s TechLive conference in California, Daly emphasized the need for rate cuts to prevent further weakening of employment conditions.
“So far, I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate,” Daly said.
She noted that current rates remain high, even as inflation approaches the Fed’s 2% target, and cautioned against further strain on the labor market.
The Federal Reserve began cutting rates in September for the first time since the pandemic, reducing the benchmark rate by half a percentage point to a range of 4.75% to 5%. This move was driven by concerns about a softening labor market and a reduction in inflation pressures. Since then, economic data has revealed stronger-than-expected hiring, and markets now expect a more modest quarter-point rate cut at the Fed’s upcoming policy meeting in early November.
Daly said the decision to cut by half a point was a “close call” but supported the move to provide adequate economic support. She refrained from specifying the pace of future cuts but stressed the importance of adjusting policy to match evolving economic conditions.
Other Federal Reserve officials, speaking on Monday, expressed support for a more gradual pace of rate reductions. Dallas Fed President Lorie Logan advocated for a cautious approach, citing economic uncertainty. Minneapolis Fed President Neel Kashkari and Kansas City Fed President Jeff Schmid also highlighted the need for more measured, incremental cuts to avoid abrupt changes to monetary policy.
