Mary Daly, president of the Federal Reserve Bank of San Francisco, at the National Association of Business Economics (NABE) economic policy conference in Washington, DC, USA, on Friday, February 16, 2024.
Graeme Sloan | Bloomberg | Getty Images
San Francisco Federal Reserve President Mary Daly said Monday she expects interest rates to be cut later this year, but declined to provide a timetable or the extent to which the central bank will ease.
With markets expecting aggressive cuts starting in September, Daly says progress on inflation and a marked slowdown in hiring are likely to prompt the Fed to some degree of policy easing.
“Policy adjustments will be needed in the coming quarter. How much that needs to happen and when that needs to happen, I think will very much depend on the information coming in,” she said during a forum in Hawaii. “But in my view we have now confirmed that the labor market is slowing and it is extremely important that we do not let it slow so much that it turns into a recession.”
The comments come on the same day that Wall Street suffered its worst decline in nearly two years, as investors grappled with fears of slowing growth and the Fed’s response. At their meeting last week, Fed officials gave some hints that lower interest rates are on the way, but they lacked the details.
Over the next two days, successive weak reports on layoffs, production and job creation caused the Fed to move too slowly.
Daly, who served as a voter on the rate-setting Federal Open Market Committee this year, pledged that policymakers will do what it takes to achieve their economic goals.
“We will do what is necessary to ensure that we achieve both our objectives of price stability and full employment,” she said. “We will make policy adjustments as soon as the economy provides the data and we know what is needed.”
Earlier in the day, Chicago Fed President Austan Goolsbee told CNBC that the central bank’s “restrictive” interest rate policy makes no sense if the economy doesn’t overheat, which he said is not the case. If there are problems with the economy, Goolsbee said the Fed “will fix it.”