Mary Daly, the President of the Federal Reserve Bank of San Francisco, recently shared her insights on interest rate adjustments. She anticipates that the Federal Reserve may implement one to two more rate cuts this year, each by 25 basis points. Notably, Daly participates in the Fed’s interest rate decision meetings as a voting member this year.
During a seminar at Boise State University in Idaho on Wednesday, Daly underscored the importance of safeguarding the U.S. labor market, asserting that the Fed is committed to continuing rate reductions this year.
“In my economic outlook, I foresee the possibility of one or two additional rate cuts, specifically by 25 basis points each,” she stated.
Last month, the Federal Reserve surprised many by lowering rates by 50 basis points, a decision that reflected emerging concerns about the labor market’s weakness and a cooling inflation rate approaching the Fed’s target of 2%.
Daly described this rate cut as a “recalibration,” a term she noted was also used by Fed Chair Jerome Powell during the press conference that announced the cut. This recalibration is intended to help maintain economic stability.
She emphasized that even as inflation subsides, the revised interest rates are starting to exert greater pressure on the U.S. economy. With the economy nearing the Fed’s objectives for inflation and employment, she expressed concern: “In my view, this situation could eventually undermine the economy,” she cautioned. “I do not want to see further slowing in the labor market.”
