Viewpoint: Three interest rate cuts this year is a reasonable baseline scenario

Fed Chairman Daly said that three interest rate cuts by the Fed this year is a "reasonable baseline" expectation. In prepared remarks, she highlighted two competing risks that officials need to consider when setting policy: a slowdown in progress on lowering inflation, on the one hand, and a sudden, sharp deterioration in the labor market on the other. Daly said it will take perseverance to get the job done, and we need to resist the temptation to act quickly when patience is required and be prepared to respond flexibly as the economy evolves. Daley believes price stability is within reach, but more needs to be done. She also discussed various factors that could hinder further progress in reducing inflation. Labor force growth and productivity may not rise as strongly as before, while consumer demand may not slow as much as expected, she said. Sustained economic momentum exceeds existing supply and remains a risk to the inflation outlook. (Golden Ten)