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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.

———–

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.

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