December rate cut still up for debate: Federal Reserve official

NEW YORK

People line up outside of Macy's flagship store before opening on Black Friday, in New York City.

A December interest rate cut is still up for debate, a senior U.S. Federal Reserve official has said, suggesting that another rate reduction is not a foregone conclusion.

"In order to keep the economy in a good place, we have to continue to recalibrate policy," San Francisco Fed President Mary Daly said during an interview with Fox Business.

"Now, whether it will be in December or sometime later, that's a question we'll have a chance to debate and discuss at our next meeting," added Daly, who will have a vote at the Fed's rate-setting committee meeting on Dec. 17 and 18.

The U.S. central bank has been on a journey since the COVID-19 pandemic, hiking interest rates to a two-decade high and holding them there in order to tame a surge in inflation, before starting to dial back rates in recent months.

The U.S. economy is now relatively healthy, with robust economic growth, an unemployment rate still relatively close to historic lows, and inflation at 2.3 percent in October, according to the Fed's favored measure, just above its long-term target of 2 percent.

Financial markets currently assign a probability of around 70 percent that the Fed will cut rates by a quarter percentage-point at its December meeting, and a roughly 30 percent chance it will pause, according to data from CME Group.

That would leave the Fed's benchmark lending rate between 4.25 and 4.5 percent, one percentage point below its level before the Fed started cutting rates in September.