Fed’s Daly says ‘not there yet’ on price stability
6:53 pm Thursday, July 18th, 2024
By Michael S. Derby
(Reuters) -Federal Reserve Bank of San Francisco President Mary Daly said on Thursday she is looking for more confidence that inflation is moving back to the Fed’s 2% target before calling for an interest rate cut.
“We don’t have price stability right now,” Daly said at a Dallas Fed event. “We’ve had some really good incoming data, but even with the incoming data on inflation being positive and good data after earlier this year, we’re not there yet” on getting inflation sustainably back to the 2% target, she said.
Daly said monetary policy is in a balancing act right now.
“It’s a risk to act too soon to normalize interest rates and then have inflation stuck below or above our target and it’s a risk to hold on too long and make the labor market falter,” she said.
Daly cautioned for patience on the prospect of rate cuts, saying Fed officials have to “balance the costs of acting fast and being wrong,” and avoiding a policy mistake is important.
The Fed is expected to cut rates in September, but some have said the central bank should act at its July meeting given cooling price pressures.
(Reporting by Michael S. Derby; Editing by Leslie Adler and Chris Reese)
