Investing.com – Mary Daly, president of the Federal Reserve Bank of San Francisco, has expressed support for a gradual rate cut, a Financial Times report said. The stance signals a possible shift in the Fed's monetary policy direction. At the same time, inflationary pressures have begun to ease.
Daly’s view comes as the central bank prepares for its annual economic meeting in Jackson Hole, a key event that sets market expectations. This is despite recent economic data showing signs of lower inflation. But Daly’s emphasis on gradualism reflects the central bank’s cautious approach to managing a complex economy.
“Kindness does not mean weak. It is not slow. It does not mean backward. But it is a wise move,” she said, adding that despite the slowdown in the labor market, “it is not weak,” as the report put it.
The Federal Reserve has maintained its hawkish stance on raising interest rates to deal with high inflation for a long time.
But as price pressures ease, policymakers increasingly face the challenge of balancing controlling inflation with supporting economic growth.
Daly's view suggests that the central bank may be approaching the point at which it can consider cutting interest rates without jeopardizing its goal of maintaining price stability.
Investors will be closely watching the Jackson Hole meeting for further clues on the central bank's policy intentions.
Daly’s comments are an early sign that the central bank may be taking a more dovish stance. That could affect market expectations for rate cuts in the coming months.
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