Written by Ann Safir
(Reuters) – San Francisco Federal Reserve President Mary Daly said on Friday that the U.S. economy and monetary policy are in “good shape” and that while efforts remain to curb inflation, risks are becoming more balanced. He expressed the view that it is.
“We need to adjust it very carefully and we need to adjust it as gently as possible so that we can continue to control inflation,” Daley told the San Diego County Economic Roundtable.
“We know that policy is in a good place, the economy is in a good place, and we can start to be more patient about what the Fed should do next,” he said. “It takes patience. It takes progress.”
The words adjustment, patience and gradualism suggest that Daly believes a Fed rate cut is coming, but not imminent.
Unlike last year, when the focus was on combating inflation, Daly said this year the Fed will need to pay more attention to another of its mandates: achieving maximum employment.
“The risks to the economy are balanced, the risks to both sides of our mission are balanced,” he said.
The Daily said early Friday that it was “premature” to think a rate cut was imminent. He said that while inflation had fallen from its 2022 peak, it was still too high, pointing to core consumer price inflation of 3.9% in December.
“There's a lot of work to be done, there's no denying that,” she said.
The Fed targets 2% inflation, which is different from the standard Daly cited. The index showed year-on-year inflation in the Personal Expenditure Price Index of 2.6% in November, the most recent measure available.
There is an agreed-upon silence period before each meeting, so Daley could be the last Fed policy official to speak publicly before the Jan. 30-31 Fed policy meeting. expensive.
Comments from other policy makers and better-than-expected economic data this week have traders tempering bets on the Fed's first rate cut in March and instead pricing in a May start.
Markets were especially focused on Fed Director Christopher Waller, who said that while inflation was “within range” of the Fed's target, the Fed should act cautiously and methodically.
(Reporting by Ann Safir; Editing by Jonathan Oatis, David Gregorio and William Mallard)