(Bloomberg) -- Federal Reserve Bank of San Francisco President Mary Daly said central bank officials are ready to lower interest rates as needed but emphasized there’s no urgent need to cut given the strength of the economy.

“There is no imminent risk to the economy faltering,” Daly said Thursday on Bloomberg Television’s Wall Street Week with David Westin, pointing to the labor market, consumer spending and economic growth. “We are ready to make moves and adjust as the data demands us to do.”

Daly said Fed officials wants to avoid keeping rates at their current level all the way until the inflation rate hits 2%, noting such an action could cause an unnecessary economic downturn. 

“It would be appropriate as inflation comes down to bring the nominal rate of interest down to make sure we’re not holding on even tighter,” Daly said. “We want to avoid holding on all the way to 2%, putting policy very tight and then cause an unnecessary downturn.” 

A bevy of Fed officials, including Chair Jerome Powell, have made clear in recent weeks they don’t see a need to rush rate cuts given the underlying resilience of the economy and labor market, and lingering risks to their inflation outlook. That patient approach has been validated by recent data showing price pressures remain elevated.

The Fed’s preferred gauge of underlying inflation rose 0.4% in January, the fastest pace since early 2023, government data released Thursday showed. Those figures followed stronger-than-anticipated consumer price data released earlier this month. 

In separate remarks Thursday, Atlanta Fed President Raphael Bostic said recent inflation readings indicate “there are going to be some bumps along the way” to the Fed’s 2% goal, and reiterated his view that it will likely be appropriate to cut rates this summer. Chicago Fed President Austan Goolsbee, speaking at a virtual event Thursday, also cautioned against reading too much into a single month’s inflation data. 

Read More: Bostic Repeats Fed Easing Will Likely Be Appropriate This Summer

Daly said she is looking for “a collage of evidence” that inflation is moving sustainably lower, including from published economic statistics and conversations with business contacts. “I see a lot of green shoots, as we like to say, but we’re not there yet,” she said.

Daly said she’s “growing more confident” that housing inflation is coming down, adding that she’s not yet seeing signs that such price growth is accelerating. 

One particular measure of rental inflation, known as owner’s equivalent rent, was a key factor behind the jump in the consumer price index in January. The story behind the outsized advance in the metric has gotten even more complicated in recent days, after the Bureau of Labor Statistics emailed a group of analysts about the reason for the move before trying to take it back.  

Read More: US Labor Department Confuses Analysts With Email on CPI Factor

Policymakers have held their benchmark lending rate in a range of 5.25% to 5.5% since July, and are expected to keep it there when they meet again on March 19-20. Investors are now betting the Fed’s first rate cut will be in June, and they expect at least three reductions this year, in line with Fed officials’ median forecast in December. 

Daly said Thursday that the Fed’s data-dependent approach — a message she said policymakers have delivered clearly — will mean there will be less forward guidance around policy, adding such an approach is because they want to be “methodical” in how they make those judgments. 

“What we are trying to do is hold on just right, and make those adjustments and not be pre-committed,” she said.

Earlier this month, Daly said three rate cuts in 2024 was a “reasonable baseline” expectation. The Fed will release policymakers’ updated rate projections at the March gathering.

--With assistance from Steve Matthews and Rich Miller.

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