The US Federal Reserve is likely to make one or two more rate cuts this year as it recalibrates policy to focus on the labor market, a senior bank official said on Wednesday.
Fed policymakers voted 11-to-1 in favor of cutting the bank’s key lending rate by half a percentage point last month, bringing the bank’s key lending rate down from a 23-year high, with Fed Governor Michelle Bowman the only voting member of the committee to publicly back a smaller cut.
Speaking in the US state of Idaho on Wednesday, San Francisco Fed President Mary Daly said she had backed a larger cut last month to “recalibrate” monetary policy.
Photo:Reuters
Daly was among the vast majority of members on the Fed’s rate-setting committee to vote for the bigger rate cut, which lowered the US central bank’s key lending rate to between 4.75 and 5 percent.
“We were patient. We saw that the things we were marching towards have started to evolve,” she said, adding “we adjust 50 basis points to get policy right-sized for the economy we have, and the one we expect to evolve going forward.”
Alongside the large cut, policymakers published updated economic forecasts in which they penciled in an additional 50 basis points of cuts over the two remaining meetings this year.
“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.
However, she cautioned that the Fed was “data-dependent,” and policy would continue to be guided by the incoming data on inflation and the health of the labor market.
Futures traders see a roughly 80 percent chance that the Fed would move ahead with a 25 basis point cut at its next meeting early next month, according to CME Group data.
Separately, US consumer inflation cooled last month — though slightly less than expected — according to government data published yesterday, providing further evidence that price pressures are easing ahead of next month's US presidential election.
The consumer price index (CPI) slowed to 2.4 percent last month from a year ago, down from 2.5 percent in August, the US Department of Labor said in a statement.
This was slightly above the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.
There was also some cause for concern for the Fed as it looks to cut interest rates: a measure of inflation that strips out volatile food and energy costs rose slightly to 3.3 percent, up from 3.2 percent in August, buoyed by a jump in the transportation services index last month.
Monthly headline inflation rose by 0.2 percent, while core inflation also exceeded forecasts to increase by 0.3 percent.
Despite the "slight upward surprise relative to what we're expecting," the inflation picture isn't all bad, Oxford Economics' deputy chief US economist Michael Pearce told AFP.
Given "the broader trend in services inflation, I think I'm still confident in the view that that's going to continue to trend lower over the next 12 months," he said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS