San Francisco Federal Reserve President: Monetary policy is "in a good position" and inflation is expected to continue to decline

According to the Zhitong Finance APP, Mary Daly, President of the Federal Reserve Bank of San Francisco, recently stated that the current monetary policy of the Federal Reserve is "in a good position," which helps to continue pushing inflation down gradually. Although she believes that inflation may struggle to reach the Fed's target of 2% within this year, she emphasized that the policy is making steady progress.

Daly pointed out at an event in Oakland, California, that the labor market is cooling but remains robust, and inflation is expected to continue declining over time. She stated, "Our current policy is well matched to the current economic conditions, so we can wait for more data to guide future decisions."

The Federal Reserve has kept interest rates unchanged since the beginning of this year. Policymakers believe that the current economic fundamentals are solid, allowing room to observe the impact of changes in tariffs and other policies on the economy.

Daly emphasized that although the labor market has slightly slowed, this is a natural process toward a more sustainable employment structure. "This helps achieve a balance in the labor market consistent with the 2% inflation target."

However, a series of tariff measures pushed by President Trump has created significant uncertainty in the business community, exacerbating hesitance in investment and hiring. The U.S. International Trade Court ruled this week that some of Trump's global tariffs are "illegal," and although the government has appealed and temporarily suspended the ruling, this decision has added more uncertainty to the market.

Meanwhile, the focus of the bond market is quietly shifting from tariffs to the rising debt levels in the United States. John Waldron, President of Goldman Sachs, stated at the Bernstein Conference on Thursday, "Previously, everyone's attention was focused on tariffs, but now the bond market is more concerned about the U.S. fiscal situation and budget debates. I believe that from a macro perspective, the biggest risk currently is not tariffs, but debt."

Waldron pointed out that the U.S. Treasury's continuous increase in bond issuance, especially long-term bonds, is pushing up long-end yields, raising government financing costs, while also exacerbating the fiscal deficit and borrowing pressures across the economy.

Just a week ago, the yield on 30-year U.S. Treasury bonds rose to its highest level in nearly 20 years, reflecting market concerns about fiscal prospects. Currently, President Trump is negotiating with Congress over a bill that would provide tax cuts for specific groups, which, if passed, could further exacerbate the fiscal deficit.

Goldman Sachs Vice Chairman and former Dallas Fed President Kaplan also stated that Goldman Sachs' clients are now focusing less on the federal funds rate and more on the trend of 10-year U.S. Treasury yields.

Nevertheless, Waldron remains confident in the resilience of the U.S. economy. "The U.S. economy and consumers have shown remarkable resilience, and frankly, this surprises me a bit, but it is also an undeniable fact."

However, Waldron also admitted that due to market volatility caused by tariffs, Goldman Sachs' investment banking revenue in the second quarter lagged behind that of the first quarter, a trend consistent with analyst expectations collected by Bloomberg. Despite facing adverse factors, he remains optimistic about the IPO market. "We completed eight IPOs last week, which indicates that the market is gradually warming up."