Mary Daly has the voting right for the September FOMC meeting, and she called for a "prudent" approach. "Gradualism is not weak, slow, or backward, it is just cautious. Although the labor market has slowed down, it is not weak."
Recently, Fed officials have signaled that the central bank is about to implement a "gradual rate cut" in interviews with the media.
On the 18th, Mary Daly, president of the Federal Reserve Bank of San Francisco, recently told the Financial Times of London that the latest economic data showed that inflation was under control and it was now time to consider adjusting borrowing costs from the current 5.25% to 5.5%.
Daly has voting rights at the FOMC meeting this year and is calling for a "prudent" approach. "Progressivism is not weak, slow or lagging, just cautious, and although the labor market has slowed down, it is not "weak."
The market is closely watching Powell's speech on the economic outlook at the Jackson Hole annual meeting at 10pm on Friday in an attempt to find the latest clues to a Fed rate cut.
The Fed hopes to maintain a certain level of "restraint" to fully complete its inflationary task.
Daly believes that although the labor market has slowed down, there is no need to worry too much, and the US economy has not fallen into crisis.
In a speech earlier this month, she said it was too early to tell if the July job report suggested an economic slowdown or a real slump. But she warned that it was "extremely important" to prevent the labor market from falling into a slump. She is "more confident" that inflation is moving towards its 2% target.
Currently, the market is betting that the Fed will cut rates for the first time in four years at the FOMC meeting next month, with a 70% chance of a quarter-point cut and a small number of investors expecting a half-point cut.
Investors generally believe that the Federal Reserve's federal funds rate will be 1 percentage point lower than current levels by the end of 2024. They speculate that to achieve this goal, the Fed will make at least one significant rate cut in the remaining three monetary policy meetings this year.
The Bank of England, the European Central Bank and the Bank of Canada have all cut interest rates, but relatively high US inflation rates at the beginning of the year forced the Fed to wait.
Recent US CPI data shows that US inflation continues to cool. In July, US CPI rose 2.9% year-on-year, a three-year low. This data further solidifies the market's expectation that the Fed will take measures to cut interest rates.
As inflation falls and the labor market becomes more balanced, Daly says the central bank must "adjust policy rates to fit our existing and expected economic conditions."
The Fed hopes to relax its existing monetary policy while maintaining a certain level of "restraint" to fully complete its inflationary task.
She also said that if the Fed does not adjust its monetary policy in a timely manner based on inflation and economic growth, there will be a very bad result: on the one hand, it will not achieve inflation control; on the other hand, the labor market will become unstable and the employment situation will become very pessimistic.
Earlier, Atlanta Fed President Raphael Bostic also said that waiting too long to cut interest rates "does bring risks."
Editor/ping