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San Francisco Federal Reserve President Daly said on Thursday that although recent inflation indicators are moving in the right direction, the central bank has not yet achieved price stability and will still rely on data when deciding whether to cut interest rates. rates.
Daly made the remarks during a fireside chat at the Federal Reserve Banks of Dallas and Atlanta. Her comments also echoed a message she delivered at a tech-focused conference organized by Fortune earlier this week.
“We’ve got some very good incoming data, but even if the incoming inflation data is positive … we’re not there yet. We don’t have price stability right now and we need to be very confident that we’re on a sustainable path. path to achieve this goal,” Daley said.
“On the other hand, our labor market is also returning to balance, and we have a dual mandate,” Daley added, referring to the Fed’s dual goals of promoting maximum employment and price stability.
Earlier this month, the June non-farm payrolls report showed job growth slowing and the unemployment rate rising. Then, last week’s latest consumer price index report showed an unexpected decline in overall data for June.
“We must have complete confidence that we will be able to achieve price stability as gently as possible. There are risks in moving too early to normalize interest rates and then letting inflation fall below or above our target.” There is a risk of holding on for too long. The risk is that this will destabilize the labor market so that people get one of two things they want,” Daley said.
“So a rate cut means we rely on the data. We will have more discussions…but when we go to the meeting in a few weeks, we will absolutely discuss this and put plans in place. We know that the policy path is for us to try to achieve both of these The best job for a statutory target,” Daley added.
The Federal Reserve’s Monetary Policy Committee is scheduled to meet on July 30-31 to make its next interest rate decision. The central bank is widely expected to keep interest rates steady, with the first rate cut of 25 basis points expected to be implemented in September.
