San Francisco Federal Reserve President Mary Daly expressed her expectation that interest rates will be lowered later this year due to the weakening labor market. While she did not provide a specific timeline or extent of the rate cuts, she emphasized that policy adjustments will be necessary in the near future.
Daly highlighted concerns about inflation and a noticeable slowdown in hiring as factors that could prompt the Fed to ease monetary policy. She stressed the importance of preventing the labor market from deteriorating to the point of triggering an economic downturn.
The recent market turbulence, exacerbated by fears of slowing growth and uncertainty about the Fed’s response, has increased expectations for aggressive rate cuts starting in September. Despite the lack of specific details from Fed officials, Daly reassured that policymakers are closely monitoring economic data and will take necessary actions to achieve price stability and full employment.
In line with Daly’s comments, Chicago Fed President Austan Goolsbee emphasized the need for a more accommodative monetary policy in response to signs of economic weakness. Goolsbee noted that the current restrictive rates policy does not align with the economic conditions, and the Fed stands ready to address any emerging challenges.
As investors remain on edge following the recent market volatility, the Fed’s commitment to supporting economic growth and stability through appropriate policy adjustments is crucial. The central bank’s focus on data-driven decision-making and flexibility in responding to changing economic conditions underscores its dedication to achieving its dual mandate of ensuring stable prices and maximum employment.