San Francisco Fed President Daly expects rate cuts as labor market weakens | Wilnesh News

San Francisco Fed President Mary Daly said on Monday she expects to cut interest rates later this year but declined to provide a timetable or extent of the central bank’s easing.

Daly said that as the market expects a sharp interest rate cut starting in September, inflation progress and a significant slowdown in hiring may push the Federal Reserve to relax policy to a certain extent.

“There will be a need for policy changes in the next quarter. How much work needs to be done and when it will happen, I think a lot depends on the information that comes in,” she told a forum in Hawaii. “But in my view, we have now confirmed that the labor market is slowing, and it is extremely important that we don’t let it slow down so much that it goes into a downturn.”

The comments came on the same day Wall Street suffered its worst drop in nearly two years as investors struggled with worries about slowing economic growth and the Federal Reserve’s response. At last week’s meeting, Fed officials hinted at an imminent rate cut but gave no specific details.

Over the next two days, a succession of weak reports on layoffs, manufacturing and job creation raised concerns that the Fed was moving too slowly.

As a constituent on this year’s rate-setting Federal Open Market Committee, Daly vowed that policymakers would take the necessary steps to achieve their economic goals.

“We will do everything we can to ensure that we achieve our goals of price stability and full employment,” she said. “As the economy provides data, we will make policy adjustments and we know what is needed.”

Earlier in the day, Chicago Fed President Austan Goolsbee told CNBC that the central bank’s “restrictive” interest rate policy would make no sense if the economy was not overheating, which he said was not overheating. Goolsby said if the economy shows signs of trouble, the Fed will “fix it.”