Fed's Daly Hints at Two Rate Cuts Amidst Trump Pressure
San Francisco Fed President Suggests Measured Approach to Rate Cuts
Mary Daly, President of the San Francisco Federal Reserve, has weighed in on the ongoing discussion about potential interest rate cuts. While she acknowledges that a rate cut is likely, she cautions against rushing the decision.
Daly Aligns with Projections for Two Rate Cuts
In a recent interview, Daly stated that two interest rate cuts this year seem reasonable, aligning with current projections from other Federal Reserve officials. She emphasized the importance of carefully assessing the economic impact of factors such as the Trump tariffs before making any preemptive moves.
Daly's comments echo similar sentiments from Fed Presidents Beth Hammack and Susan Collins, who both advocate for a cautious, data-driven approach. Collins has specifically urged patience as the Fed considers its next steps.
Regarding the potential inflationary impact of tariffs, Daly noted that current data does not indicate a significant negative effect. However, she acknowledged the possibility of tariffs influencing the economy in less direct ways, highlighting the need for thorough evaluation before implementing rate cuts. Daly also cautioned against waiting for inflation to hit the 2% target before acting, warning that such a delay could harm the economy.
Former U.S. President Donald Trump has been vocal about his belief that the Fed's current policies are detrimental to economic growth, advocating for aggressive rate cuts of up to 300 basis points. However, Fed Chair Jerome Powell maintains a stance of cautious observation, leading to speculation that Trump may seek to replace him.
Other Fed Voices Advocate for Holding Steady
Federal Reserve Governor Adriana Kugler, speaking at the Housing Partnership Network Symposium, expressed her support for maintaining the current policy rate for an extended period. She cited the strong labor market and potential inflationary pressures from the Trump tariffs as key reasons for her position.
Kugler emphasized that maintaining a restrictive stance is crucial for anchoring long-term inflation expectations. She affirmed her commitment to basing policy decisions on incoming economic data and a thorough assessment of risks to the Fed's dual mandate.
Recent data indicates that the June CPI rose to 2.7% annually, while the PPI fell to 2.3% annually, showing mixed signals regarding inflation trends.
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