Fed President San Francisco Mary Daly believes that the timing for interest rate cuts is approaching based on signs of a weakening labor market and a lack of evidence of persistent inflation from tariffs.

Ms. Daly emphasized that while there is no guarantee the Fed will cut interest rates immediately in September, every upcoming meeting is seen as an opportunity to adjust monetary policy in line with economic developments.

MAIN CONTENT

  • Mary Daly predicts that the timing of interest rate cuts is not far off due to the weakening labor market.

  • The Fed may implement two cuts of 25 basis points each this year, in September and December.

How does Mary Daly assess the current labor market and inflation situation?

Ms. Mary Daly noted that the labor market shows signs of weakening, and there has been no evidence of inflation spreading due to tariffs. This raises the possibility that the Fed will start cutting interest rates to support growth.

Recent data shows a slight decrease in labor demand, creating pressure to lower interest rates to boost the economy. Ms. Daly emphasized that this is an important factor in determining monetary policy in the coming months.

What is the Fed's plan for interest rate cuts this year?

Mary Daly stated that the Fed may cut interest rates twice, each by 25 basis points, expected in the meetings in September and December this year.

She noted that the main goal is flexibility in adjustments, not that there won't be any cuts, but the timing and frequency of cuts will depend on inflation trends and the labor market.

I am ready to wait another cycle, but I cannot wait indefinitely. Each upcoming meeting is seen as an opportunity to consider immediate policy adjustments.
Mary Daly, President of the Fed San Francisco, August 2023

What factors influence the Fed's decision to cut interest rates?

The Fed will consider the trends in inflation and the state of the labor market to adjust interest rates in the most suitable way for maintaining macroeconomic stability.

If inflation rises and the labor market strengthens, the number of interest rate cuts may decrease. Conversely, if the labor market continues to weaken and inflation does not spread, the Fed will need to prepare for more cuts.

What are the main interest rate policy scenarios that could occur in the future, according to Ms. Daly?

Ms. Daly described two main scenarios: one is that two cuts are sufficient to adjust policy; the other is that if the economy is weaker than expected, the Fed may need to cut more than anticipated.

It is important that the Fed remains flexible in each meeting to respond promptly to economic developments, avoiding market instability.

Frequently Asked Questions

Is the Fed certain to cut interest rates in September?

No, September is a possibility; the Fed will carefully consider economic data before making a decision.

How many times does the Fed plan to cut interest rates in 2023?

Mary Daly believes that two cuts, each by 25 basis points, are likely to occur in September and December.

How does inflation affect the Fed's decision?

If inflation rises, the Fed may reduce the number of rate cuts or even refrain from cutting at all.

Does a weak labor market increase the likelihood of rate cuts?

A weakening labor market often drives the Fed to lower interest rates to stimulate growth and employment.

Why is each Fed meeting seen as an opportunity to adjust policy?

Because the economy is continuously changing, the Fed needs to respond flexibly in a timely manner to maintain macroeconomic stability.

Source: https://tintucbitcoin.com/fed-daly-du-bao-giam-lai-suat-som/

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