Fed’s Daly signals gradual rate cut path

Investing.com — San Francisco Federal Reserve President Mary Daly indicated a preference for a measured approach to cutting interest rates, according to a Financial Times report. Her stance suggests a potential shift in the Federal Reserve’s monetary policy trajectory as inflationary pressures continue to ease.

Daly’s comments come as the central bank prepares for the annual Jackson Hole Economic Symposium, a key event for shaping market expectations. While recent economic data showed signs of cooling inflation, Daly’s emphasis on gradualism underscores the Fed’s cautious approach to navigating a complex economic landscape.

“Gradualism is not weak, it’s not slow, it’s not behind, it’s just cautious,” she said, adding that the labor market — while slowing — was not “weak,” the report added.

The Federal Reserve has maintained an aggressive stance on raising interest rates to combat persistently high inflation.

However, as price pressures show signs of moderating, policymakers are increasingly faced with the challenge of balancing inflation control with supporting economic growth.

Daly’s outlook suggests the central bank may be approaching a point where interest rate cuts can be considered without jeopardizing its mandate of price stability.

Investors will be watching the Jackson Hole symposium closely for more clues about the Fed’s policy intentions.

Daly’s comments provide an early indication that a more accommodative tone could emerge within the central bank, which could influence market expectations for interest rate cuts in the coming months.