Fed’s Mary Daly Signals Rate Cuts Could Start Next Month
San Francisco Federal Reserve President Mary Daly said she still expects interest rate cuts to begin as early as next month. Her comments came despite stronger retail sales and a surprise rise in wholesale prices in July.
Daly Sees Room for Two Cuts in 2025
Speaking to Fox Business, Daly noted that a cooling labor market and an economy that is “slowing but not slow” balance against inflation, which remains above the Fed’s 2% target. She said this backdrop “would warrant a couple of cuts sometime this year.”
Daly added that two rate cuts remain a reasonable projection. However, she stressed that the final number will depend on incoming economic data.
“Of course, we will wait to see the data, and maybe it’ll be fewer, maybe it’ll be more. But ultimately, I think two remains a good projection,” Daly explained.
Balancing Inflation and Jobs
Daly emphasized the importance of supporting the labor market, even while monitoring inflation.
“What I don’t want to do is be so worried that inflation might come up again or stay persistent that we wait too long and don’t support the labor market,” she said.
Market Odds on September Move
According to the Fed Rate Monitor Tool, there is an 83% probability of a 25-basis-point cut in September. Markets see just a 17% chance that the Fed will keep rates unchanged.
