Fed’s Daly says the recent rate cut was a ‘close call’

Federal Reserve Bank of San Francisco President Mary Daly participates in a moderated question-and-answer session at the 2024 WSJ Tech Live:

• Says Fed will continue to adjust policy
• 50 bps cut was meant
  to right-size policy, expect additional cuts going forward
• Recent fed rate cut
  a ‘close call’
• I came down strongly
  in favor of 50 bps cut
• 50 bps cut was what
  was needed; didn’t want to find out we had overtightened, and taken
  jobs from people
• Will be data
  dependent for Fed’s November meeting
• So far have not seen
  anything that would suggest we would not continue to cut rates
• Policy is absolutely
  still tight
• I don’t want to see
  labor market slow further
• To get a soft landing accomplished we have to adjust policy rate as inflation falls
• Reasonable estimate for the neutral rates is between 2.5 and 5%
• Fed will learn, experientially, where the neutral rate really is
• My own neutral rate estimate is around 3%

All this emphasis on the neutral rate while the US economy is powering along. Go figure.

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Daly is often perceived as a parrot for Federal Reserve Chair Powell’s views.

This article was written by Eamonn Sheridan at www.forexlive.com.