Fed’s Daly says minds are open to cutting rates in coming meetings

Federal Reserve Bank of San Francisco President Mary Daly:

• Risks to fed’s mandates getting in more balance
• Minds are open to
  cutting rates in coming meetings
• Concern is that we
  will deteriorate from current place of balance in jobs report; we
  don’t see that right now
• July jobs report
  reflected a lot of temporary layoffs, hurricane effect
• Will be watching
  carefully to see if next job market report reflects same dynamic, or
  reverses
• Underneath july jobs
  report is some reason for confidence we are slowing but not falling
  off cliff
• Fed will do what it
  takes to ensure we achieve both goal
• If react to one data
  point, we would almost always be wrong
• A ‘steady in the
  boat’ approach works well
• Policy needs to be pro-active
• We hear the economy is down shifting
• People are getting inflation relief, but still above 2% target
• Not seeing a move to widespread layoffs yet, that would be an early warning sign

Huh. I don’t want to whine, but ‘widespread layoffs’ are not an ‘early warning sign’, they are a sign you are behind the curve.

More:

• Its very clear that policy is working in the way intended
• The Fed policy rate will need to be adjusted; when and how much depends on the data
• Too early to tell if the job market is slowing, or if there is real weakness
• The Fed is prepared to do what the economy needs when we are clear on what that is; there is a lot more data before the next Fed meeting
• The two Fed mandates are now equally balanced risks
• Fed’s reaction function is clear, and market interest rates are already adjusting
• Policy adjustments will be necessary in the coming quarters
• Its extremely important that we don’t let the job markets slow so much that it tips into a downturn
• Want to make sure we keep economic momentum

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