Investing.com -- San Francisco Federal Reserve president Mary Daly has indicated a preference for a measured approach to lowering interest rates, as per a Financial Times report. Her stance suggests a potential shift in the Federal Reserve's monetary policy trajectory as inflationary pressures continue to ease.
Daly's comments come as the central bank prepares for its annual Jackson Hole Economic Symposium, a pivotal event for shaping market expectations. While recent economic data has shown signs of cooling inflation, Daly's emphasis on gradualism underscores the Fed's cautious approach to navigating a complex economic landscape.
“Gradualism is not weak, it’s not slow, it’s not behind, it’s just prudent,” she said, adding that the labour market — while slowing — was “not weak”, the report added.
The Federal Reserve has maintained an aggressive stance on interest rate hikes to combat persistently high inflation.
However, as price pressures show signs of moderation, policymakers are increasingly faced with the challenge of balancing inflation control with supporting economic growth.
Daly's perspective suggests that the central bank may be nearing a point where interest rate reductions can be considered without jeopardizing its price stability mandate.
Investors will be closely watching the Jackson Hole symposium for further clues about the Fed's policy intentions.
Daly's comments provide an early indication that a more dovish tone may be emerging within the central bank, potentially influencing market expectations for interest rate cuts in the coming months.