San Francisco Fed President Mary Daly said two interest rate cuts this year remain a “reasonable” baseline, as the inflation from tariffs appears less severe than initially feared. Speaking overnight. She projected the policy rate could ultimately stabilize around 3% or slightly above.
Daly downplayed the precise timing of the next move, saying, “Whether it happens in July or September or some other month is really not the most relevant piece.” What matters, she argued, is that the Fed stays on track to avoid overtightening and harming the labor market. “We don’t want to unnecessarily tighten the economy in a way that hurts the labor market or growth,” Daly added.
She also emphasized that bringing inflation down the “last mile” doesn’t require a sharp slowdown. “I wouldn’t want to see more weakness in the labor market,” Daly said. “Which is why you can’t wait forever” to cut rates.
