San Francisco Fed President Mary Daly shares her outlook for the U.S. economy and discusses the Fed's interest rate plans on “how to make money.”
San Francisco federal reserve President Mary Daley on Friday put the brakes on Wall Street's aggressive rate-cutting policy.
In an interview with FOX Business's Charles Payne, Daly warned that it was “premature” to think a rate cut was imminent, adding further indications that inflation was moving back towards the central bank's 2% target rate. He said he needed to see the evidence.
“I think it's appropriate to look ahead and ask when policy adjustments will be necessary so as not to put pressure on the economy, but it's really premature to think that's coming soon,” he said.
“We need consistent and sustained declines in inflation to gain enough confidence to begin adjusting policy rates,” said Daley, who has a vote on the Federal Open Market Committee, which makes policy decisions this year. ''He stressed the need to check for signs.
When will the Federal Reserve start cutting interest rates?
San Francisco Federal Reserve President Mary Daley speaks at an event at the Commonwealth Club on Tuesday, March 26, 2019 in San Francisco, California. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
In December, central bankers signaled at their last meeting of the year that a nearly two-year battle against inflation was finally over and a series of interest rate cuts were in the works.
A majority of Federal Open Market Committee officials expect interest rates to fall to 4.6% by the end of 2024, with at least three quarter-point rate cuts next year, according to the latest quarterly economic forecast released after the meeting. It suggests that. Policymakers also agreed to further rate cuts in 2025 and 2026.
Inflation fight faces 'difficult' last mile
But despite December's better-than-expected inflation report, traders are betting on another deep rate cut starting as early as March. About 47% of investors are currently pricing in at least a quarter-point rate cut in March, according to the FedWatch tool, which tracks CME Group trading. This is a sharp drop from a week ago, when about 77% of investors expected a rate cut in March.
Pedestrians near the Treasury Building in Washington DC (Ting Sheng/Bloomberg via Getty Images/Getty Images)
meanwhile inflation has subsided Latest data from the Labor Department shows that wages have risen 3% in recent months compared to the same period last year. Despite recent declines, Americans continue to pay more for many necessities, including food, health care, and rent.
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However, the rapid rise in interest rates has not stopped consumers from spending and businesses from hiring.
The labor market continues to move at a healthy pace; Employers added 199,000 people New employees in November. Job openings remain high, and the unemployment rate recently fell from 3.9% to 3.7%.
Fed officials will hold their next meeting on January 30th and 31st. Interest rates are widely expected to remain unchanged for a third consecutive month.
