By Ann Saphir
(Reuters) -San Francisco Federal Reserve President Mary Daly on Monday said she supported the U.S. central bank’s interest rate cut last week, and will want to sift through incoming data to assess if another reduction in borrowing costs is warranted at the December 9-10 meeting.
“I thought it was appropriate to take another bit off the policy rate,” she said at the Forum Club of the Palm Beaches in Florida, noting that the U.S. economy has been resilient, and that while inflation is running above the Fed’s 2% target, the labor market has also softened. As for next month’s policy decision, Daly said she will “keep an open mind.”
The Fed’s quarter-percentage-point rate reduction at its October 28-29 meeting was the second such cut of the year, and brought its benchmark policy rate to the 3.75%-4.00% range. Several policymakers since the meeting have said they thought the rate cut was not needed; a couple of officials, however, have said they already feel that another rate cut will be needed at the Federal Open Market Committee meeting in December.
Daly said by the time of that meeting she will want to assess if the 50 basis points of rate cuts so far this year have delivered enough insurance against further softening in the labor market, or if more support might still be needed.
Data including state-based unemployment insurance claims suggests the labor market is not on a “precipice,” she said, adding that inflation is running at around 3%. Despite the absence of official economic statistics during the ongoing federal government shutdown, she said, the central bank has access to a lot of data, including from surveys and conversations with businesses and communities that will help inform views about appropriate policy.
“Oftentimes, before a meeting of the FOMC, the views are widely different,” she said. “But then, by the time you get to the meeting, so much more information has been given that it’s easier to see a convergence around at least a couple of ways to go.”
(Reporting by Ann Saphir, Editing by Franklin Paul and Paul Simao)
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