Fed's Daly: Cautiously optimistic on inflation path, maintains call for gradual cuts ...Middle East

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Feds Daly: Cautiously optimistic on inflation path, maintains call for gradual cuts

San Francisco Fed President Mary Daly made a rare Good Friday appearance for a moderated discussion on the economy and monetary policy outlook. She emphasized patience:

On the economy:

    There is a little bit of pulling forward on spending, but not as much as you might thinkUS economy remains "in a good place" with "good momentum" despite some sectors like transport showing slowdownConsumer and business spending remains resilient despite sentiment concernsLabor market cooling gradually without major disruption

    On inflation:

    Restrictive policy continues putting "downward pressure on inflation"Sees "very, very gradual process on inflation" requiring continued restrictive stanceInflation risks have "increased" and needs vigilant monitoringCommitted to bringing inflation back to 2% target

    On monetary policy:

    "Policy is in a good place" with "no rush" to make changesSEP median projected two rate cuts this year, but could be "fewer if inflation stickier""More cuts if growth falters" showing data-dependent approachEmphasizes "gradual policy rate reductions" with "no urgency"Neutral rate "may be rising" and estimates around 3% remain "uncertain"

    The market continues to price a high chance of a June rate cut (70%) but Fed officials don't see it, at least not yet.

    This article was written by Adam Button at www.forexlive.com.

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