Federal Reserve Bank of San Francisco President Mary Daly:
Risks to fed’s mandates getting in more balanceMinds are open to
cutting rates in coming meetingsConcern is that we
will deteriorate from current place of balance in jobs report; we
don’t see that right nowJuly jobs report
reflected a lot of temporary layoffs, hurricane effectWill be watching
carefully to see if next job market report reflects same dynamic, or
reversesUnderneath july jobs
report is some reason for confidence we are slowing but not falling
off cliffFed will do what it
takes to ensure we achieve both goalIf react to one data
point, we would almost always be wrongA ‘steady in the
boat’ approach works wellPolicy needs to be pro-activeWe hear the economy is down shiftingPeople are getting inflation relief, but still above 2% targetNot seeing a move to widespread layoffs yet, that would be an early warning sign
Huh. I don’t want to whine, but ‘widespread layoffs’ are not an ‘early warning sign’, they are a sign you are behind the curve.
More:
Its very clear that policy is working in the way intendedThe Fed policy rate will need to be adjusted; when and how much depends on the dataToo early to tell if the job market is slowing, or if there is real weaknessThe Fed is prepared to do what the economy needs when we are clear on what that is; there is a lot more data before the next Fed meetingThe two Fed mandates are now equally balanced risksFed’s reaction function is clear, and market interest rates are already adjusting Policy adjustments will be necessary in the coming quartersIts extremely important that we don’t let the job markets slow so much that it tips into a downturnWant to make sure we keep economic momentum
This article was written by Eamonn Sheridan at www.forexlive.com.
