Background on Mary Daly and the San Francisco Fed
Mary Daly, the President of the Federal Reserve Bank of San Francisco (Fed), has indicated that the time may be approaching for interest rate cuts. Her comments come as evidence of a weakening U.S. labor market and the absence of persistent inflation driven by tariffs become increasingly apparent.
Daly’s Stance on Recent Fed Decision
Last week, the Federal Reserve decided to keep short-term borrowing costs within the range of 4.25% to 4.50%, instead of lowering them as some of her colleagues and President Donald Trump had urged. Daly mentioned that while she was willing to wait for another cycle, “I cannot wait forever.”
Future Interest Rate Adjustments
Although a rate cut in September is not guaranteed, Daly stated that she believes every upcoming meeting is crucial for considering these policy adjustments. She noted that the two quarter-point rate reductions contemplated by Fed officials for this year still seem like an appropriate amount of recalibration, with the timing being less critical than ensuring the adjustments are made.
Key Economic Indicators
Daly acknowledged that there are still many data points to consider, including upcoming labor market and inflation reports before the Fed’s September meeting. She remains open-minded about the necessary adjustments.
Potential for Multiple Rate Cuts
Daly emphasized that further rate cuts could be necessary if inflation rebounds or the labor market strengthens. She believes that more than two rate cuts are likely, and the Fed should also be prepared for additional adjustments if the labor market shows signs of weakness without indirect effects on inflation being observed.
Recent Labor Market Data
A recent report from the U.S. Department of Labor showed that American businesses added only 73,000 jobs last month, highlighting the weakening labor market conditions.
Key Questions and Answers
- Who is Mary Daly? Mary Daly is the President of the Federal Reserve Bank of San Francisco, one of the 12 regional Reserve Banks that make up the Federal Reserve System in the United States.
- Why is her opinion relevant? As a member of the Federal Open Market Committee, Daly’s views on monetary policy, including interest rate adjustments, can influence the overall direction of U.S. monetary policy.
- What factors are contributing to her suggestion for rate cuts? The weakening U.S. labor market and the lack of persistent inflation driven by tariffs are key factors prompting Daly’s call for potential interest rate cuts.
- How many rate cuts does Daly anticipate? Daly believes that more than two rate cuts may be necessary, depending on economic developments such as inflation and labor market conditions.
- What recent data supports her stance? A report from the U.S. Department of Labor showing only 73,000 jobs added last month underscores the weak labor market conditions Daly is considering.
