In their recent speeches on December 20, Fed officials indicated that they would remain cautious about future monetary policy adjustments and reiterated that policy decisions would be highly dependent on economic data. Comments from Mary Daly, president of the Federal Reserve Bank of San Francisco, and John Williams, president of the Federal Reserve Bank of New York, provided the market with an important window into the Fed's internal discussions on the interest rate path.
Daly pointed out in her speech that the Fed's 25 basis point rate cut this week was a difficult decision after careful consideration, and she agreed with Chairman Powell's view that future policy adjustments need to be cautious. Daly emphasized that the Fed has completed the process of recalibrating interest rates, marking the end of this stage. She said that a total of 100 basis points of rate cuts were appropriate, and she was satisfied with the Fed's forecast of two rate cuts in 2025. However, before considering further rate cuts, the Fed will cautiously wait for more economic information to arrive. Daly also expects that the number of rate cuts next year will be much less than previously expected.
At the same time, on the same day, Williams also expressed a similar view, saying that based on the existing data, the baseline path points to further rate cuts. As one of the permanent voting members of the Federal Open Market Committee (FOMC), Williams's opinion is particularly important, and his remarks indicate that even if there is a possibility of rate cuts, the Fed will still closely monitor economic indicators to guide its decision-making process.
The comments of the two officials reflect the cautious approach taken by the Fed in the face of a complex global economic environment. Although they each emphasized different aspects - Daly focused on acting cautiously and waiting for more data, while Williams pointed out the possibility of rate cuts based on the existing information - they all agreed that the Fed's next move will closely depend on the actual economic performance. This shows the Fed's commitment to ensuring that monetary policy can both support economic growth and maintain price stability.