San Francisco Fed President: "No Urgency for Interest Rate Cuts"

"Good Situation... Avoid Certainty of Inflation Entrenchment or Decline"

Mary Daly, President of the Federal Reserve Bank of San Francisco, said on the 15th (local time) that there is no urgent need to cut interest rates.

According to Bloomberg News, President Daly stated at a Stanford Economic Policy Research Institute event that the U.S. economy and labor market are strong, and inflation exceeds the Federal Reserve's (Fed) target of 2%, so "there is no urgency to lower interest rates."

Mary Daly, President of the Federal Reserve Bank of San Francisco [Photo by Reuters]

She added, "The worst thing we can do now is to act urgently when urgency is not needed."

President Daly has voting rights on the Fed's monetary policy decisions this year.

Recently, Fed officials have been making remarks urging caution regarding interest rate cuts.

Earlier, on the 2nd, President Daly said, "There is no urgent need for rate adjustments," while also evaluating the Fed's March dot plot, which predicted three rate cuts this year, as reasonable.

However, on this day, instead of signaling the timing of rate cuts or repeating past views, she expressed the position that forecasts should be made cautiously.

President Daly said, "Policy is in a good place. The Fed is in a prepared position," adding, "We should not be too confident that the recent sticky inflation is an indicator of the direction we will take going forward, nor should we be confident that predictions of continued inflation decline will materialize."

The U.S. Department of Commerce announced that retail sales in March increased by 0.7% compared to the previous month. This figure significantly exceeded market expectations (0.4%). The retail sales indicator is considered a pillar accounting for two-thirds of the U.S. real economy. As a result, concerns have been raised about the risk of inflation becoming entrenched, leading to dominant views that the Fed will approach interest rate cuts more cautiously.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate futures market currently sees a 77% chance that the Fed will keep rates unchanged at the current level in June.