San Francisco Fed President Mary Daly said overnight that the time has come to seriously consider lowering interest rates, citing the need to preserve the current strength of the US economy. “I really am of the view that it’s time,” she said, adding that two rate cuts this year now look like a “likely outcome.” Nevertheless, Daly noted that her preferred timing points to a potential move in the fall, aligning her with the broader consensus on the FOMC, even if some colleagues are advocating for action as early as July.
Daly downplayed concerns that the latest wave of tariffs would necessarily spark inflation, arguing that companies are increasingly absorbing costs or adapting rather than fully passing them on. “It’s possible it just doesn’t materialize,” she said, referring to fears of lasting inflation driven by trade policy.
Cautioning against excessive delay, Daly warned that waiting for persistent inflation before acting could result in a policy mistake. “It’s useful now to sort of recognize that waiting for inflation to rise or become persistent could leave us behind,” she said, emphasizing her desire to stay ahead of the curve.
