Federal Reserve (Fed) Bank of San Francisco President Mary Daly provided key insights in a recent statement regarding the state of the US economy and the Fed’s monetary policy. Daly acknowledged the progress made in controlling inflation and maintaining a stable labor market but emphasized that there is still work to be done. Here are some highlights from her remarks:
### Key Highlights
– Daly predicts one or two more rate cuts in 2024.
– Gradual rate cuts may not have as significant an impact as perceived.
– Daly is confident in the Fed’s ability to reduce its balance sheet without causing market disruptions.
– Inflection points like the current one are likely to lead to more dissenting opinions within the Fed.
– The lack of dissents does not indicate unanimous agreement among officials.
– Signs indicate a revival in the housing market.
– Daly is prepared for potentially erratic economic data.
– A 3% interest rate may be considered neutral.
– The current funds rate is far from its likely long-term level.
– Inflation has decreased across various sectors without major disruptions.
– Daly is cautiously optimistic about the economic outlook.
– Continued economic expansion remains a strong possibility.
– The labor market has stabilized post-pandemic.
– The economy has shown improvement with a significant drop in inflation.
– Unemployment rates are nearing long-term averages.
– Public expectations suggest further easing of inflation.
– The Fed’s monetary policy is still restrictive as efforts are made to lower inflation.
– Ongoing progress towards the Fed’s objectives is essential, requiring continued vigilance.
– The Fed aims to achieve 2% inflation while maintaining full employment.
– Risks to the Fed’s mandates on job market and inflation are now more balanced.
In summary, Daly’s comments highlight the ongoing efforts by the Fed to manage inflation and stabilize the labor market. Despite positive developments, challenges remain, and the Fed is committed to addressing them to ensure economic stability and growth. Daly’s cautious optimism reflects a balanced approach to monetary policy that aims to support both economic expansion and price stability.