Fed's Daly: No Need for Significant Rate Cuts Next Month

According to reports, Fed's Daly opposed the necessity of a 50-basis-point rate cut at the Fed's September meeting. In an interview on Wednesday, Daly said, "To me, 50 basis points sounds like we're seeing an emergency—I worry it would send an emergency signal, and I don't think the labor market has that much momentum. I don't see a reason to 'catch up.'" Daly supported the Fed's decision to keep rates unchanged last month. She later stated that, given inflation pressures were not as strong as expected and labor market conditions had softened, she would support a rate cut in September. Daly said that after the July nonfarm payroll report significantly revised down the job growth data for previous months, she no longer described the labor market as "solid." She noted that the labor market is "not bad right now," but "you know the direction of change is unfavorable. We can't ignore the fact that it's softening." She added, "Current policy might be too tight for the future economic trajectory, so in my view, it needs recalibration." Daly favors gradually adjusting policy to a more neutral level over "the next year or so."

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