Federal Reserve Bank of San Francisco President Mary Daly reaffirmed on Tuesday that monetary policy is still working to bring inflation pressures down, even after last month’s rate cut.
In a speech prepared for an event at New York University, Daly stated that the half percentage point cut in the federal funds rate target implemented in September was a “right-sizing” of the policy stance. While acknowledging the progress made in curbing inflation, she emphasized that the Fed is not letting go of its restrictive monetary policy.
“Even with this adjustment, policy remains restrictive, exerting additional downward pressure on inflation to ensure it reaches 2%,” Daly said.
While she did not explicitly outline future monetary policy plans, Daly stressed the importance of vigilance and intentionality in delivering inflation at the target while maintaining full employment.
Last month, the Fed lowered its target rate to between 4.75% and 5% in response to easing inflation pressures and rising risks to the job market. However, strong September hiring data raised questions about the pace and size of future rate cuts.
In her remarks, Daly noted that the economy has improved significantly, with inflation pressures declining and the job market stabilizing. She added that the current unemployment rate of 4.1% is close to the long-run average and that the job market is no longer a major source of inflation pressures.
