.
Daly’s comments on Bloomberg TV:
- It’s hard to imagine anything that could derail a September rate cut.
- It’s time to change the policy.
- We do not want to continue to tighten monetary policy while inflation is falling.
- The risks to our goals are now balanced.
- The most likely outcome is that we continue to see gradual inflation slowdown, and a sustainable pace of labor market growth.
- If the labor market weakens more than expected, we will need to be more aggressive.
- We know one thing, the trend of prices is down.
- I don’t want to declare that we are on the road to neutrality.
- The interest rate is too restrictive, and we need to “adjust” it.
- I see more evidence that the job market is slowing down, which is unwelcome.
- We don’t want to see further weakness in the labor market.
- We will find the neutral price as we go, we have a long way to go to reach 2.50% or 3%
- I think we are close to the trend, about 1.5-2%.
- The NFP indicator was inconsistent with other indicators, and revisions are bringing it back into alignment.
Daly last spoke on August 18 and called for a “prudent” approach to cutting interest rates.
Like Powell, she did not mention anything like “gradual” or “patient” when talking about cutting rates. This is another strong hint that a 50 basis point rate cut is on the cards, though it certainly doesn’t look like her base case.
Moreover, there is a clear plan from the Federal Reserve, as it talked about the need to take more aggressive measures in the event of a weak labor market.
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