Federal Reserve Bank of San Francisco President Mary Daly participates in a moderated question-and-answer session at the 2024 WSJ Tech Live:
- Says Fed will continue to adjust policy
- 50 bps cut was meant
to right-size policy, expect additional cuts going forward - Recent fed rate cut
a ‘close call’ - I came down strongly
in favor of 50 bps cut - 50 bps cut was what
was needed; didn’t want to find out we had overtightened, and taken
jobs from people - Will be data
dependent for Fed’s November meeting - So far have not seen
anything that would suggest we would not continue to cut rates - Policy is absolutely
still tight - I don’t want to see
labor market slow further - To get a soft landing accomplished we have to adjust policy rate as inflation falls
- Reasonable estimate for the neutral rates is between 2.5 and 5%
- Fed will learn, experientially, where the neutral rate really is
- My own neutral rate estimate is around 3%
- Would want to be open-minded to continue to ease policy if inflation is falling, even if economy is strong
All this emphasis on the neutral rate while the US economy is powering along. Go figure.
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Daly is often perceived as a parrot for Federal Reserve Chair Powell’s views.
This article was written by Eamonn Sheridan at www.forexlive.com. Source