Source: Golden Ten Data
Just two weeks ago, Daly thought the Federal Reserve would cut interest rates three times this year; this week, she “kept quiet.”
San Francisco Federal Reserve Chairman Daly reiterated on Monday EST that the Federal Reserve is in no hurry to adjust interest rates. She pointed out that economic growth is steady, the job market is strong, and inflation remains high.
Daly said that before the Federal Reserve starts cutting interest rates, she needs to be convinced that inflation is moving towards the Fed's 2% target.
The San Francisco Federal Reserve Chairman has the right to vote on the Federal Reserve's monetary policy this year, and has always been biased towards the dovish camp until now. She now reaffirms that the current policy is in a “good state.”
Daly said at an event at the Stanford Economic Policy Research Institute, “The worst thing we can do right now is to act urgently when there is no need for urgency.” She added:
“We are ready. We can respond as the economy develops. The labor market shows no signs of weakness. Inflation is still above our target. We need to be convinced that the inflation rate will fall back to our target before we feel it is necessary, and I also feel the need to respond.”
Just two weeks ago, Daly also said that it would be “reasonable” to cut interest rates three times this year. She didn't restate this view on Monday, nor did she give any clear signal about when she might be ready to consider cutting interest rates; she only said she needed to be convinced that inflation was moving in the direction of 2%.
According to a report released last week, the US CPI data for March rose more than expected for the third month in a row, which heightened the concerns of some economists and policy makers about stagnant inflation progress.
Currently, more and more people expect the Federal Reserve to stabilize the policy interest rate in the 5.25%-5.5% range by mid-September, and cut interest rates only twice before the end of the year.
Daly said, “We must think carefully. We must not be too confident that the recent sticky inflation is an indication of the future inflation path, and we cannot be too confident that our prediction that inflation will gradually continue to decline will become a reality.”
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