BUSINESS-ECONOMY
Although the Fed might consider cutting rates in September, some voices have joined in to pitch their case for action at the July meeting in view of cooling price pressures. But Daly's comments suggest a more measured approach: one that seeks long-term stability over immediate action. Federal Reserve Bank of San Francisco President Mary Daly reiterated that she would want to see firmer signs that inflation is heading back toward the Fed's 2 per cent target before the central bank considers cutting interest rates. In comments at a Dallas Fed event, Daly expressed concerns about the current state of price stability. "We don't have price stability right now," Daly noted. "We've had some really good incoming data, but even with the incoming data on inflation being positive and good data after earlier this year, we're not there yet" on getting inflation sustainably back to the 2 per cent target, she said. Along these lines, Daly described how tight of a tightrope walk monetary policy is on at present. "It's a risk to act too soon to normalize interest rates and then have inflation stuck below or above our target and it's a risk to hold on too long and make the labor market falter," she said. She further advised patience on the prospect of rate cuts, saying Fed officials have to "balance the costs of acting fast and being wrong," and avoiding a policy mistake is important. Although the Fed might consider cutting rates in September, some voices have joined in to pitch their case for action at the July meeting in view of cooling price pressures. But Daly's comments suggest a more measured approach: one that seeks long-term stability over immediate action. Essentially, Mary Daly's comments reflect the patience the Fed has toward attending to inflation and interest rates. Her emphasis on patience and being careful mirrors broader challenges at the central bank in the context of attaining dual mandate objectives of price stability and full employment. While the Fed decides to tread through such complexities, focus has been made on data-driven decisions so that sustainable economic growth can be warranted. None
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