In light of the robust state of the economy and labor market, as well as the fact that inflation remains over the Federal Reserve's objective of 2%, Mary Daly, the president of the San Francisco Federal Reserve Bank, stated on Monday that there is "no urgency" to reduce interest rates in the United States.
It is becoming widely anticipated that the Federal Reserve will maintain its policy rate in the range of 5.25% to 5.5% until the middle of September.
This is more than a year after the Fed's most recent rate hike, and it will only lower rates twice before the end of the year. However, inflation in the first three months of the year was greater than the majority of forecasts anticipated.
"The worst thing to do is act urgently when urgency is not required," Daly, one of the 19 central bankers in the United States who are responsible for setting monetary policy, said at the Stanford Institute for Economic Policy Research.
Most Federal Reserve experts anticipated at least three rate reductions by the end of the year, as late as March.
However, the fact that consumer spending is solid and that the unemployment rate in the labor market was 3.8% in the previous month gives little reason to be concerned that policy is excessively tight.
A mere two weeks ago, Daly stated that it would be "reasonable" to reduce interest rates by three this year.
Not only did she not reiterate that viewpoint on Monday, but she also did not provide any clear indication as to when she may be ready to consider a rate cut. The only thing she did say was that she would need to be certain that inflation was heading toward 2%.
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