Fed’s Daly backed rate cut, keeps open mind on December decision

Investing.com -- San Francisco Federal Reserve President Mary Daly said Monday she supported last week’s interest rate cut and will analyze upcoming data before deciding on another reduction in December.

"I thought it was appropriate to take another bit off the policy rate," Daly said at the Forum Club of the Palm Beaches in Florida, noting the economy’s resilience while acknowledging inflation remains above the Fed’s 2% target and the labor market has softened.

Daly emphasized the need to keep monetary policy "modestly restrictive" while maintaining "an open mind" about the December decision. She stated that the Fed will need to balance risks to its dual mandate of price stability and maximum employment.

The Fed official indicated that 50 basis points of cuts this year puts the central bank in a better position, though she noted inflation is "still printing around 3%" compared to the 2% target.

Regarding the labor market, Daly said it has "softened quite a bit" but "doesn’t look like it’s on a precipice," adding that she views "pockets of softness as a leading indicator."

When asked about apparent disagreements among Fed officials, Daly pushed back on characterizations of a divided Federal Open Market Committee. "I wouldn’t even use the word ’divided,’" she said, explaining that "disagreement is usually what you see when world is uncertain" and that "everyone should want the FOMC to debate and disagree."

Daly also discussed the Fed’s data-gathering approach, noting that "government data is not the only data we get" and that "looking ahead requires talking with people." She acknowledged having "less information than used to" but maintained the Fed "can still make a decision as needed."

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