San Francisco Federal Reserve President Mary Daly strongly supports Powell's hawkish views: The Federal Reserve is not in a hurry to cut interest rates

According to the Zhitong Finance APP, Mary Daly, President of the San Francisco Federal Reserve, stated on Wednesday that the strong performance of the U.S. economy allows Federal Reserve policymakers to remain patient and wait for more evidence to observe how the new round of tariff policies led by the Trump administration will affect American businesses and households. Daly's latest remarks echo the hawkish comments made by Federal Reserve Chairman Jerome Powell last week, when Powell emphasized at a press conference following the interest rate meeting that the Federal Reserve does not need to rush to adjust the benchmark interest rate, as the U.S. economy continues to show resilience, the current policy is moderately restrictive, and the cost of further observation is relatively low. He also stated that President Trump’s calls for interest rate cuts would not affect the Federal Reserve's work.

"When you look back at the current economic situation without uncertainty, we have solid economic growth data, a robust labor market, and continuously declining inflation," Daly said on Wednesday at a conference hosted by the California Bankers Association. "If we are to achieve a sustainable economic growth path, this is exactly the state we want to see."

Daly indicated that the Federal Reserve's monetary policy is currently in a moderately tight state and is prepared to respond to any changes in the economy. She noted that the Federal Reserve's monetary policy is "in a good position" to respond promptly to any unexpected situations arising from the Trump administration's policies on tax cuts, trade tariffs, immigration, and deregulation.

"The keyword today is patience," she said in an interview. "We need to be patient to observe, rather than to speculate."

Last week, Federal Reserve policymakers collectively maintained borrowing costs unchanged at the interest rate meeting. Several policymakers indicated that they expect the U.S. unemployment rate and inflation to rise slightly due to the negative impacts of tariff policies, but the ongoing uncertainty surrounding tariff policies makes it difficult for them to assess how the U.S. economy will evolve.

Earlier this week, after high-level economic and trade discussions between China and the U.S. announced an agreement to temporarily lower tariffs on various goods within 90 days while seeking a broader trade agreement, the Federal Reserve's decision to maintain its monetary policy appeared increasingly wise. Economists are currently shifting their predictive stance, believing that the probability of a U.S. economic recession has significantly decreased, but many still predict a slowdown in economic activity. In contrast, before the positive trade consensus was reached between China and the U.S., most economists predicted that the U.S. would fall into recession this year.

As Federal Reserve officials continue to signal the maintenance of current interest rates, and with the two largest economies in the world, China and the U.S., reaching a trade consensus and agreeing to significantly reduce each other's tariffs, expectations for a "soft landing" of the U.S. economy have rapidly increased, leading Wall Street financial institutions like Goldman Sachs to significantly cool their bets on Federal Reserve interest rate cuts.

According to reports, a team of economists from Goldman Sachs now expects the Federal Reserve to begin three rate cuts in December instead of their previous bet starting in July; economists from Citigroup have pushed back their expectation for the Federal Reserve's next rate cut from June to July, while economists from another financial institution, Barclays, predict that the Federal Reserve will implement only one rate cut in 2025, followed by three 25 basis point cuts next year. Previously, Barclays economists had expected two 25 basis point cuts this year, to occur in July and September Wall Street analysts generally expect that the price increase trend driven by tariff policies will become more pronounced in the coming months, and they believe this will keep the Federal Reserve hesitant about interest rate cuts.

"Our forecast anticipates that tariffs will lead to a surge in U.S. goods prices in June and July," wrote Michael Hanson, an economist from JP Morgan, in a statement following the release of the CPI inflation report. "Economic analysts and Federal Reserve officials are watching the specific extent of price increase pressures."

Daly stated in her speech that Trump's tariff policy has caused a "shock of uncertainty," which could potentially drive up U.S. inflation in the near future, but this has not yet evolved into a demand shock that could harm U.S. economic growth and the labor employment market