Federal Reserve Bank of San Francisco President Mary Daly
Fed
needs to cut policy rate because inflation is falling and the economy
is slowingOn size of September Fed rate cut, “we don’t know yet.”Daly says she needs more data, including Friday’s job market
report and CPI.Fed must calibrate policy to the evolving economy. Labor market has softened but is still healthy, and that “has
to be sustained and protected.” Hard to find evidence that labor market is faltering. Overly tight policy could mean additional, unwelcome labor market
slowing. We have not restored price stability; inflation is still people’s
number one concern. Businesses are being “frugal” on hiring, but not yet
“dusting off their layoff manuals.” We are at an inflection point in the economy, and data will be
volatile.Fed can take aggressive action when the outlook is clear, but the
current outlook is uncertain.
This article was written by Eamonn Sheridan at www.forexlive.com.
