San Francisco Fed President Mary Daly has joined the chorus of Federal Reserve officials advocating for a reduction in interest rates. In an interview on Monday, Daly stated, “The labor market has achieved full balance. The time has come to adjust policy.”
This aligns with remarks made by Fed Chairman Jerome Powell at the Jackson Hole Symposium last week, where he expressed confidence in inflation returning to the 2% target and affirmed that “the time has come to adjust policy.”
While Daly said the Fed’s commitment to curbing inflation, she also stressed the importance of preventing restrictive policies from negatively impacting the labor market.
Daly also indicated that despite the positive signs, the fight against inflation is far from over. She noted, “We are a long way from declaring victory, but we will achieve our inflation target.”
She reiterated that the Fed’s goal has always been to reduce inflation gradually, and policymakers will remain vigilant in balancing the need for tighter monetary policy with the desire to avoid unnecessary harm to the labor market.
Daly’s remarks add to growing expectations of an interest rate cut in September. She acknowledged, “It’s hard to imagine anything that would interfere with the September rate cut.”
However, the extent of the rate cut remains uncertain. Daly stated that it is “too early to judge” how much rates will need to be lowered.
