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Fed's Daly - Policy Adjustments Coming

FED

San Francisco Fed President Daly has commented that the central bank has an open mind to cutting rates in coming meetings. The risks around the Fed's mandate are getting more balanced (RTRS).

  • On Friday's jobs report, Daly stated that there were likely temporary factors driving the weaker outcome (including Hurricane effects). She stated that while conditions in the labour market are slowing, they are not falling off a cliff (RTRS).
  • These comments seem to suggest that she thinks the market has overreacted to Friday's payroll data.
  • She added that the indicators that she looks at for the labour market are not flashing red, but need monitoring. It was important to not let the labour market shift into a downturn.
  • The Fed policy rate will need to be adjusted, but when and by how much is data dependent.
  • She noted that there are a lot more data between now and the next Fed, but was more confident inflation is on a sustainable path to 2%.

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