San Francisco Fed president Mary Daly says a Fed rate cut is getting closer.The FOMC held rates at 4.25%4.50% last week, a level maintained since May, according to Reuters.
Daly noted that every meeting is now live for policy adjustments, hinting that the current median projection of two 25 bp cuts this cycle remains appropriate. She emphasized her open mind ahead of a Sept 1617 gathering, pointing to upcoming data including another jobs report, two CPI releases and a PCE price index before then.
While Daly didn’t call last Friday’s nonfarm payrolls of 187,000 workers in July dangerously weak, she said it adds to evidence after evidence that the labor market is softening from last year’s pace. She cautioned that if inflation rebounds, policymakers may dial back to fewer cuts, but if weakness continues, they might need more than two 25 bp cuts.
A sooner cut could drive bond yields lower and buoy equities sensitive to financing costs. Investors will eye the Sept 1617 FOMC meeting for confirmation on rate-cut timing.
This article first appeared on GuruFocus.