US Fed official says one or two more rate cuts 'likely' this year

NEW YORK

The U.S. Federal Reserve is likely to make one or two more rate cuts this year as it recalibrates policy to focus on the labor market, a senior bank official has said.

Fed policymakers voted 11-to-1 in favor of cutting the bank's key lending rate by half a percentage point last month, bringing the bank's key lending rate down from a 23-year high.

Speaking in Idaho, San Francisco Fed President Mary Daly said she had backed a larger cut last month in order to "recalibrate" monetary policy.

Daly was among the vast majority of members on the Fed's rate-setting committee to vote for the bigger rate cut, which lowered the US central bank's key lending rate to between 4.75 and 5 percent.

"We were patient. We saw that the things we were marching towards have started to evolve," she said. "And we adjust 50 basis points to get policy right-sized for the economy we have, and the one we expect to evolve going forward."

Alongside the large cut, policymakers also published updated economic forecasts in which they penciled in an additional 50 basis points of cuts over the two remaining meetings this year.

"I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy," Daly said.

But she cautioned that the Fed was "data-dependent," and policy would continue to be guided by the incoming data on inflation and the health of the labor market.