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San Francisco Federal Reserve President Mary Daly said Thursday that while recent inflation measures have been moving in the right direction, the central bank has not yet achieved price stability and will continue to rely on data to decide whether to cut interest rates. rates.
Daly’s comments came during a fireside chat hosted by the Federal Reserve Banks of Dallas and Atlanta. Her comments also echoed her own message from a technology conference hosted by Fortune earlier this week on Monday.
“We’ve had some really good data coming in, but even though the data coming in on inflation is positive… we’re not there yet. We don’t have price stability right now, and we have to be very confident that we’re on a sustainable path to get there,” Daly said.
“On the other hand, we also have a labor market that is recovering and we have a dual mandate,” Daly added, referring to the Fed’s dual goal of promoting maximum employment and stable prices.
Earlier this month, the June nonfarm payroll report showed a slowdown in job growth and an enhance in the unemployment rate. Then last week, the latest consumer price index report showed an unexpected drop in the headline number for June.
“We need to be absolutely certain that we can deliver price stability as gently as possible. There is a risk of moving too early to normalize interest rates and then keeping inflation below or above our target, and there is a risk of holding on too long and causing the labor market to collapse in a way that would give people one of two things they wanted,” Daly said.
“So what that means for rate cuts is that we are data dependent. We will have a lot more discussion … but when we go into the meeting in a few weeks, we will certainly discuss that and come up with a policy path that we know is our best work in trying to meet those two stated goals,” Daly added.
The Fed’s monetary policy committee is scheduled to meet July 30 and 31 to make its next decision on interest rates. The central bank is widely expected to keep rates steady, with the first 25-basis-point cut expected in September.
