Title: Federal Reserve to Cut Interest Rates to Protect US Labor Market, Says San Francisco Fed President
Investing.com -- In an exclusive interview with Multibagger, San Francisco Fed President Mary Daly emphasized the need for the Federal Reserve to lower interest rates to safeguard the US labor market. Daly highlighted the rising "real rate of interest" in a slowing economy, cautioning against over-tightening monetary policy, which could further slow down employment growth.
As the Fed prepares for its upcoming policy meeting on Sept. 17-18, investors are anticipating a 25 basis points cut in the current borrowing costs, which have remained high for over a year. The central bank had implemented a series of rate hikes in 2022 and 2023 to combat inflation.
With the focus shifting to labor market data, including the crucial August nonfarm payrolls report, recent indicators suggest a gradual softening in the US job market. Despite this, Daly believes that the labor market remains balanced and not weak, with no clear signs of faltering.
Analysts suggest that any signs of a deepening slowdown in job growth could prompt the Fed to implement more significant rate reductions. The outcome of the Fed's decision will have a significant impact on the US economy and financial markets, affecting borrowing costs, investment opportunities, and overall economic stability. Stay tuned for updates as the Fed's policy meeting approaches.