MNI BRIEF: Fed Adjustments Necessary In Coming Quarters - Daly

San Francisco Federal Reserve President Mary Daly said Monday the Fed will need to make adjustments to the fed funds rate in the coming quarters, but indicated a need for more data and patience while waiting until the next FOMC meeting in September.

"Policy adjustments will be necessary in the coming quarters. How much that needs to be done and and when it needs to take place, I think that's going to depend a lot on the incoming information. But for my mind, we've now confirmed that the labor market is slowing and it's extremely important that we not let it slow so much that it tips itself into a downturn. We just don't want to see that - we don't see it yet," Daly said in Q&A at a Hawaii Executive Collaborative event.

The "economy has been slowing" for "the last several months" and "we have a reasonably solid labor market," she said. "My message to you is, as we have been doing, the Federal Reserve, the FOMC, is prepared to do what the economy needs when we are clear what that is and there's many more pieces of information that come out between now and when we next meet" in mid-September.

"We're not data point dependent, we're data dependent," Daly said, emphasizing data dependence does not mean looking backward. "Policy needs to be proactive, which means it has to be working on projections." Daly also said that Friday, after the surprisingly weak jobs report, she reached out to her contacts who said they are not laying off workers but slowing hiring. She added that the jobs report on Friday included a lot of temporary job loss. "We don't want to go too far on the labor market." (See: MNI INTERVIEW: No Alarm Bells Yet In July US Unemployment Jump)

"We have inflation coming gradually back down to 2% but we need to bring it fully down to 2%," Daly said.