On Tuesday, April 2nd local time, San Francisco Federal Reserve Chairman Mary Daly stated that the "three rate cuts within the year" reiterated by officials last month was a reasonable expectation, but there is currently no rush to reduce borrowing costs.
At an event in Nevada, Daley said, "I think this is a very reasonable baseline." However, given the strong growth momentum of the US economy, there is currently no urgency to adjust central bank interest rates. "Staying still is the right policy at the moment."
Two weeks ago, the Federal Open Market Committee (FOMC) released a "dot matrix" in its resolution: officials overall believed that the year-end central bank interest rate would be 75 basis points lower than the current level, and if it were to be lowered by 25 basis points each time, it would need to be lowered three times, which is consistent with the views of December last year.
Last Friday, the San Francisco Federal Reserve, led by Daley, held a macroeconomic and monetary policy meeting. Federal Reserve Chairman Powell attended the meeting and conducted a nearly 40 minute interview. Powell mentioned that the current policy of the central bank is in a relatively good position and can respond to a series of changes in data direction.
Powell reiterated that lowering interest rates is not appropriate until officials have confidence that inflation is moving towards their 2% target. The Federal Reserve will not overreact to the data from these two months and needs more positive inflation data. It will also act cautiously and accurately grasp it.
Daley also stated in today's speech that inflation is indeed decreasing, but the pace of decline is bumpy and slow. She said that the timing and scale of interest rate cuts will depend on the speed of inflation slowdown and whether the economy is weak. "Three rate cuts within the year are just a prediction, not a promise, and it is too early to make this a predetermined path."
Daley has voting rights in the FOMC this year, and another member of the vote, Cleveland Fed Chairman Mester, also stated that she believes it is appropriate for the Fed to cut interest rates three times within the year, but emphasized that the number of cuts is also very likely. "Actually, it depends on what happens to the economy and how it evolves."
It should be pointed out that the "three rate cuts within the year" in the "grid chart" is the median predicted by 19 Federal Reserve officials, with five decision-makers believing it to be two, two believing it to be one, and even two believing that the current interest rate will continue until the end of the year. Therefore, the average expected number of rate cuts is between two and three.
Last week, Atlanta Fed Chairman Bostic stated that he expected interest rates to be lowered only once this year. "As long as the economy is strong, only GDP is high, as long as companies are hiring and people have jobs, I won't be in a hurry to lower the inflation rate to 2%. If inflation continues to follow the current trend, I will be satisfied."