Fed’s Mary Daly Makes Case for Two Rate Cuts Amid Trump’s Push

San Francisco Federal Reserve President Mary Daly is the latest Fed official to comment on the possibility of a Fed rate cut. Daly suggested that an interest rate cut will come at some point, but warned that there was no need for them to be in a hurry.

Two Fed Rate Cuts This Year Are Reasonable

In a Bloomberg interview, Daly opined that two interest rate cuts this year are reasonable, while referring to the current projections from Fed officials. However, she remarked that there was no need to lower preemptively and that the economy is in a good position for them to wait a while and assess the impact of the Trump tariffs on inflation.

Her remarks follow statements made by Fed Presidents Beth Hammack and Susan Collins earlier this week, who also support a wait-and-see approach before they move for a Fed rate cut. Collins, in particular, called for patience amid the push for lower rates.

Commenting on the tariffs, Daly acknowledged that there was a possibility that tariffs might not lead to higher inflation. She noted that there hasn’t been any data so far to show that the tariffs would have a negative impact, and so this policy could have a muted effect.

On the other hand, the San Francisco president stated that the impact of tariffs could come in other forms, which is why it is important for them to take in the information before they move for a Fed rate cut. Meanwhile, she also mentioned that they cannot wait for inflation to get to target 2% before they cut rates, as this would likely ‘injure’ the economy.

U.S President Donald Trump already believes that the Fed is hurting the economy by not cutting rates now. The president has already called for a rapid 300-basis-point cut. However, Fed Chair Jerome Powell also continues to insist on the wait-and-see approach, which has led to reports that Trump could fire him soon.

Fed’s Adriana Kugler Also Against A Cut For Now

Speaking at the Housing Partnership Network Symposium, Governor Adriana Kugler said that she finds it appropriate to hold the policy rate at the current level for some time. She alluded to the strong labor market and potential inflationary pressure from the Trump tariffs as the reason for this opinion.

Kugler further remarked that this still-restrictive stance on a Fed rate cut is important to keep longer-run inflation expectations anchored. She plans to make policy decisions based on incoming economic data, the evolving outlook, and her assessment of risks to both sides of their dual mandate.

As CoinGape reported, the June CPI and PPI inflation dropped this week. The yearly CPI data came in higher than expectations, rising to 2.7%, its highest level since February earlier this year. Meanwhile, the yearly PPI fell to 2.3%, lower than expectations.