Mary Daly Suggests Two Rate Cuts This Year, But Cautions Against Rushing Despite Trump’s Pressure

San Francisco Federal Reserve President Mary Daly has weighed in on the ongoing monetary policy debate, signaling support for two interest rate cuts by the end of 2025. However, she warned that the Fed should not act hastily – and ruled out a rate cut in July.

🔹 The economy remains resilient, says Daly

In an interview with Bloomberg, Daly said that current economic conditions give the Fed room to be patient. While she acknowledged that two cuts are a “reasonable scenario,” she emphasized the importance of waiting to assess the impact of Trump’s tariffs on inflation and overall economic stability. Her comments echo statements from Fed officials Beth Hammack and Susan Collins earlier this week, who also advocated for a wait-and-see approach before implementing rate cuts.

🔹 Tariffs may not necessarily drive inflation

While the market widely expects import tariffs to raise prices, Daly noted that the impact could be more muted. She explained that no clear data currently shows a significant inflationary effect, but also warned that tariffs could affect the economy in other ways, such as weakening consumer confidence or investment outlooks. Daly also noted that waiting for inflation to reach the 2% target before adjusting rates could “likely hurt” the economy.

🔹 Trump presses for deep rate cuts

President Donald Trump continues to pressure the Federal Reserve for swift action, calling for a 300 basis point cut and accusing the Fed of harming the economy with its current stance. Reports have even suggested that Trump may consider removing Fed Chair Jerome Powell if the central bank doesn’t shift course.

🔹 Fed Governor Kugler opposes early cuts

Fed Governor Adriana Kugler also voiced caution during a Housing Partnership Network symposium. She stated that keeping interest rates steady for the time being is appropriate, given the strong labor market and the inflationary risks associated with Trump’s tariffs. Kugler emphasized that maintaining anchored inflation expectations is crucial and that the Fed must base its decisions on evolving data, outlooks, and risks tied to its dual mandate of price stability and full employment.

🔹 June inflation data shows mixed signals

Recent macroeconomic data paints a complex picture: annual CPI inflation rose to 2.7%, its highest since February, while the PPI (Producer Price Index) dropped to 2.3%, below expectations. The Fed now finds itself at a crossroads — balancing a strong economy with mounting political and market pressure. The key question is whether it will maintain patience or yield to external calls for swift monetary easing.

#Fed , #FederalReserve , #Powell , #USPolitics , #TRUMP

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