Fed’s Daly Indicates Gradual Approach to Rate Cuts

San Francisco Federal Reserve president Mary Daly has expressed a preference for a cautious approach to lowering interest rates, according to a report. Her position indicates a potential adjustment in the Federal Reserve’s monetary policy as inflationary pressures continue to subside.

Daly’s remarks come in advance of the central bank’s annual Jackson Hole Economic Symposium, an important event for shaping market expectations. While recent economic data suggests a cooling of inflation, Daly’s focus on gradualism highlights the Fed’s careful strategy in dealing with a complex economic environment.

“Gradualism is not weak, it’s not slow, it’s not behind, it’s just prudent,” she stated, also noting that the labor market—though slowing—is “not weak.”

The Federal Reserve has pursued an aggressive approach to interest rate hikes to tackle persistently high inflation. However, as price pressures show signs of moderation, policymakers face the challenge of balancing inflation control with the need to support economic growth.

Daly’s view implies that the central bank might be approaching a point where interest rate cuts can be contemplated without compromising its mandate for price stability.

Investors will be observing the Jackson Hole symposium closely for additional insights into the Fed’s policy direction. Daly’s comments suggest that a more dovish sentiment may be emerging within the central bank, which could influence market expectations for interest rate cuts in the near future.