Table of Contents:
Introduction to Fed monetary policy
In recent days, statements by Mary Daly, president of the San Francisco Federal Reserve, have attracted the attention of analysts and investors. In an interview on Fox Business, Daly pointed out that a possible interest rate cut is not guaranteed for the current month, but it remains a possibility that policymakers are considering. This debate is part of a changing economic environment, where the Fed must balance growth and inflation
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Mary Daly’s statements
Daly said that to keep the economy in a good position, it is necessary to continue to recalibrate monetary policy. He said: “We must continue to move politics downward to accommodate the economy.” These words reflect a view shared by other Fed officials, who expect further rate cuts over the next year, but without confirming an imminent reduction
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The expectations of other Fed officials
The president of the Chicago Fed, Austan Goolsbee, expressed his expectation that interest rates would “drop a lot from where they are now.” Even the governor of the Fed, Adriana Kugler, confirmed that the economy is in a ‘good position’ and that inflation is following a ‘sustainable path’ towards the 2% target. However, only Governor Christopher Waller showed a willingness to support a rate cut in December, stressing that his decision will depend on additional economic data
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Balance between supply and demand
Daly also mentioned that currently supply and demand are more or less in balance, and that progress on inflation is ongoing. He said: “It’s gradually falling, and it’s important for families and businesses that need relief, but there’s still work to be done.” This suggests that, despite progress, the Fed must remain cautious and attentive to economic dynamics
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The neutral rate and future uncertainties
According to Daly, the neutral rate, or the level at which rates do not stimulate or curb economic growth, has probably risen “closer to 3%.” However, he warned that the Fed should proceed with caution, stating: “I think we can take our time and adjust as the economy provides us with more information.” This prudence is crucial in a context of global economic uncertainty
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Conclusion on the Fed’s prospects
In summary, statements by Mary Daly and other Fed officials indicate a cautious but proactive approach to monetary policy management. With inflation falling and the economy showing signs of stability, the Fed is preparing to carefully evaluate its next moves, keeping a close eye on future economic conditions
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