It is too early to say whether the Federal Reserve should cut interest rates again this year, and more information about the state of the US economy is required before a decision is reached, a top US central banker said in Dublin on Thursday.
Mary C Daly, the president and chief executive of the Federal Reserve Bank of San Francisco, said she has an “open mind” about whether the US central bank should reduce borrowing costs in December for the third time in 2025.
Ms Daly was speaking at an event organised by the Institute of International and European Affairs (IIEA) think tank.
In October, the Fed voted for a quarter of a percentage point cut, bringing rates below the 4 per cent market for the first time since late 2022.
RM Block
However, the board of governors was split in opposite directions for the first time since 2019, with one member voting for a larger half-point reduction, while another governor wanted the Fed to hold rates steady.
Decision-making was complicated by the US government shutdown, which meant that policymakers did not have access to a full range of economic data, including the October jobs report, which was published late.
On Thursday, Ms Daly said her view of the US economy and labour market, which has shown signs of weakening in recent months, is that businesses have adopted an attitude of “cautious optimism”.
She said the US economy came into 2025 in a “good place”, with inflation coming down and the labour market “looking fairly solid”.
The Trump administration’s various policy announcements around “trade and immigration policy”, and also deregulation, have caused a “big rise in uncertainty”.
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However, uncertainty has “come down quite a bit” since then, Ms Daly said, “perhaps not quite to normal levels but reasonable levels”.
Against this backdrop, she said more information is required before a decision is reached on a December interest rate cut.
“It’s premature to say definitely no cut or definitely cut,” Ms Daly said.
“I really think there’s a premium on waiting to decide until you have as much information as you can possibly have to make a good decision, but not waiting so long that you become inactive because you’re paralysed with not having that last piece of information you think you might use.
“I’ve got about four weeks before the next meeting, and there’s a lot of information that comes out between now and then, and so that’s why I have an open mind, but I haven’t made a final decision on what I think.”
