The US economy is not in a state of emergency, so interest rates should be lowered gradually.

Recently, Ms. Mary Daly, President of the US Federal Reserve (Fed) branch in San Francisco, said that this agency needs to gradually lower interest rates.

US Capitol Building. (Source: Reuters)

Ms Daly's remarks come as global central bank leaders prepare for their annual meeting in Wyoming, US this week.

In an interview with the Financial Times , Ms. Daly said that recent economic data helped her strengthen her belief that inflation was under control.

According to her, it is time to consider adjusting interest rates, which are currently in the range of 5.25% - 5.5%, the highest level in 23 years.

Ms. Daly's gradual rate cut contrasts with economists' concerns that the world's largest economy could fall into a severe recession and the Fed needs to cut rates quickly.

The pace of US interest rate cuts is expected to be a key topic at a meeting of policymakers in Jackson Hole, Wyoming later this week.

Fed Chairman Jerome Powell's speech on August 23 will attract the attention of investors, who are waiting to see how he plans to curb inflation without causing a recession.

Ms. Daly commented: "There is no need to react strongly to signs of weakness in the labor market, because the US economy has not shown signs of a deep recession. The world's largest economy is not in a state of emergency."

Investors are betting on the Fed cutting interest rates at its meeting next month, potentially the first cut in four years.

The market predicts a 70% chance that the Fed will cut interest rates by 0.25 percentage points, while others expect a 0.5 percentage point cut. The market expects the US to cut interest rates in the last 3 meetings of the year.

Ms. Daly affirmed that inflation is gradually moving towards the 2% target.

"Although the Fed has not yet achieved its inflation target, progress in the inflation battle gives me confidence that the United States is on the path to achieving price stability. The Fed needs to adjust interest rates to match current economic conditions and future forecasts," said the San Francisco Fed President.

Source: https://baoquocte.vn/quan-chuc-fed-nen-kinh-te-my-khong-o-tinh-trang-khan-cap-nen-ha-lai-suat-tu-tu-283136.html