On Thursday, the President of the San Francisco Federal Reserve, Mary Daly, advocated for a reduction in the Fed’s policy rate, citing a decline in inflation and a deceleration in economic activity. She noted that the decision regarding the extent of a potential rate cut in September remains uncertain and that further data is essential, particularly in light of the upcoming job market report and consumer price index statistics.
Daly emphasized the need for the central bank to adjust its policies in response to the changing economic landscape. While acknowledging that the labor market has shown signs of softening, she asserted that it remains robust and requires protection to maintain its health. She expressed caution against the risks of implementing an overly tight monetary policy, which could inadvertently exacerbate any slowdown in the labor market.
She also remarked on the ongoing concerns regarding price stability, indicating that inflation continues to be a top priority for many individuals and businesses. According to her observations, while companies are being cautious with hiring practices, they have not yet resorted to mass layoffs. Daly described the economy as being at a critical turning point and acknowledged that expected data could exhibit significant volatility. While the Federal Reserve is capable of taking decisive actions when the economic outlook is stable, she indicated that the current situation remains unpredictable.
The market appeared to respond to her statements, as the US Dollar faced renewed selling pressure against its main competitors. The US Dollar Index registered a slight decline of 0.08%, trading around the 101.30 level. The overall sentiment surrounding the dollar suggests a cautious approach from investors in light of the Fed’s potential policy adjustments.
