San Francisco Federal Reserve President Daly stated that the Federal Reserve will soon cut interest rates, and short-term U.S. Treasury yields fell to intraday lows
San Francisco Federal Reserve President Mary Daly hinted that Federal Reserve policymakers will soon be ready to lower interest rates. She also stated that inflation caused by tariffs may only be temporary
On Friday local time, San Francisco Federal Reserve President Mary Daly hinted that Federal Reserve policymakers will soon be ready to lower interest rates. She also stated that inflation caused by tariffs may only be temporary.
In a brief social media post shared by the San Francisco Fed on Friday, Daly wrote:
It is soon time to recalibrate policy to better match the economy. The price increases caused by tariffs will be one-time events. It will take time to fully confirm this, but we cannot simply wait for perfect certainty, or we risk harming the labor market.
Daly said, "Congress has given the Federal Reserve two goals: maximum employment and price stability. Currently, there is tension between the two, as tariffs push inflation up while signs of a slowdown appear in the labor market."
So far this year, the Federal Reserve has kept interest rates unchanged in the range of 4.25%–4.5%. Daly's remarks echoed those of Fed Chair Jerome Powell last week—he hinted at a possible rate cut as early as the September policy meeting, citing the latest data showing a sharp slowdown in U.S. job growth.
Federal Reserve policymakers are still trying to assess the impact of Trump's radical trade policy changes on the economy. Data released earlier on Friday indicated that consumer spending in July recorded the largest increase in four months, supporting signs of resilience in the U.S. economy.
Following Daly's remarks, short-term U.S. Treasury yields fell to a low during the session. The yield on the two-year U.S. Treasury fell by more than 2.2 basis points, refreshing its daily low and approaching 3.6050% after Daly discussed the prospect of a rate cut in September.
Daly does not have a vote on monetary policy this year. Earlier this month, she stated that there is no need for significant interest rate adjustments in September, but she still expects two rate cuts this year
