San Francisco Fed President Daly: Rate Cuts Are Coming!

Mary Daly Signals Rate Cut

San Francisco Federal Reserve Bank President Mary Daly said on Wednesday that she "fully supports" the Fed's decision to cut its policy rate last week. Daly said further rate cuts were likely in the period ahead.

Policy Adjustments Are Imperative

>Daly said, "Will they happen right now, this year or further down the road? It's hard to say, but the important thing is that these policy adjustments are likely to be necessary. Both to keep pressure on inflation to maintain price stability and to support the labor market to keep it close to full employment."

Forecasts and the Economic Situation

Daly emphasized that there is no expectation of a recession and that the economy is not heading towards a "stagflation" environment of high inflation and high unemployment. Explaining that the labor market has cooled, Daly said he would not characterize the current situation as "strong", though he would not call it "weak".

A Sustainable Market

Daly said, "I would say this is sustainable, but... I would not want to see further softening. That's why the rate decision was so clear: You are buying a kind of insurance to support the labor market. Even so, borrowing costs are still high enough to put downward pressure on inflation," he added.