Fed's Daly: One or two more Fed rate cuts likely this year

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that she "fully" supported the Fed's half of a percentage-point interest-rate cut last month. Daly further stated that one or two more rate cuts this year are likely if the economy evolves as she expects, per Reuters.  

Key quotes

Fully supported half-point rate cut.

Quite confident we are on path to 2% inflation.

We are at full employment.

With policy rate steady, real rate was rising.

Rising real rate was a recipe for overtightening and injuring the labor market.

Rate cut was a recalibration, to rightsize rates for the economy.

Size of September rate cut does not say anything about pace or size of next cuts.

Two or one more cut this year is what is likely.

We will watch data, monitor labor market and inflation.

We will make more or fewer adjustments to rates as necessary.

I do not want to see further slowing in the labor market.

Most firms are seeing a hybrid work situation, not a return to a 5-day-in-the-office situation. 

I am not worried about accelerating inflation. 

I was more worried about injuring the labor market. 

Will watch inflation data carefully. 

Little evidence that balance sheet expansion has much of a direct effect on inflation. 

We are coming near the inflation target but not satisfied, no victory declared. 

Balance sheet is coming down to more normalised levels.

Market reaction 

The US Dollar Index (DXY) is trading 0.01% lower on the day at 102.90, as of writing.