Federal Reserve (Fed) Bank of San Francisco President Mary Daly noted on Tuesday that although the Fed has made significant progress on tamping down inflation while also keeping the US labor market within long-run averages, there's still a lot of progress to be done. The Fed policymaker also leaned into the current rate cut spread, noting that it was likely the Fed will only see one or two more rate cuts in 2024.

Key highlights

If forecasts are met, I see one or two more rate cuts this year.

Talk of gradual rate cuts means less than it appears.

I am more comfortable that the Fed can wind down the balance sheet without market trouble.

Inflection points, like now, are likely to generate more dissents.

The lack of Fed dissents doesn't mean that officials fully agree.

See signs the housing market is coming back to life.

I won't be surprised by messy economic data.

3% rate may be around neutral.

The funds rate a long way from where it's likely to settle.

Inflation's retreat has been broad based.

The Fed has been able to get inflation down without major disruption.

I am cautiously optimistic about economic outlook.

A continued expansion remains very possible.

The labor market has cooled, largely normalized from the pandemic.

The economy is clearly in a better place, inflation has eased a lot.

The current unemployment rate is near the long-run level.

The data shows public expects inflation to ease more over time.