Recently, several Federal Reserve officials have made dovish remarks, and the atmosphere of interest rate cuts in the market has become increasingly strong. But San Francisco Fed President Mary Daly called for patience with interest rate cuts on Thursday.
Daley said that even though inflation indicators have been moving in the right direction recently, the Federal Reserve has not yet achieved price stability and will still rely on data to decide whether to cut interest rates.
We have some very good data, but even if inflation data is positive... we haven't reached that level yet. We haven't achieved price stability yet, and we need to be very confident that we are on a sustainable path to achieving this goal, "said Daley.
On the other hand, the labor market is also restoring balance, and we have a dual mission, "Daley added. He refers to the Federal Reserve's dual goals of promoting full employment and price stability.
Earlier this month, the US non farm payroll report for June showed a slowdown in job growth and an increase in unemployment rate. Last week, the latest Consumer Price Index (CPI) report showed an unexpected drop in inflation data for June.
Daley believes that monetary policy is currently in a state of equilibrium, and taking action too early to normalize interest rates carries risks.
Daley cautioned people to be patient about the prospect of interest rate cuts, stating that Fed officials must "balance the cost of quick action and making mistakes," and that avoiding policy mistakes is important.
Daley has voting rights in the FOMC this year.
The Federal Reserve's Monetary Policy Committee is scheduled to hold meetings on July 30th and 31st. The market generally expects that the central bank will maintain stable interest rates and will cut interest rates by 25 basis points for the first time in September. However, some people also suggest that given the cooling of price pressures, the Federal Reserve should take action at its July meeting.
Daley's remarks are in stark contrast to some other Federal Reserve officials. Chicago Fed President Austan Goolsbee said on Thursday that the Fed may need to lower borrowing costs as soon as possible to avoid a more severe deterioration in the labor market.