(Bloomberg) -- Federal Reserve Bank of San Francisco President Mary Daly said she expects the US central bank will continue lowering interest rates this year in an effort to protect the labor market.
“I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy,” Daly said Wednesday in a moderated discussion at Boise State University in Idaho, referring to one or two quarter-point reductions.
The Federal Open Market Committee last month lowered rates by a larger-than-normal 50 basis points amid signs of weakening in the labor market and as inflation cooled toward the Fed’s 2% target.
Daly characterized that move as a “recalibration,” the same word employed by Fed Chair Jerome Powell to describe the cut as something aimed at preserving the economy’s strength.
The San Francisco Fed chief noted that as inflation has came down, inflation-adjusted interest rates were rising, putting more of a drag on an economy that was already close to the Fed’s inflation and employment goals.
“That was ultimately a recipe, in my judgment, for breaking the economy,” she said. “I do not want to see further slowing in the labor market.”
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