Key Facts
• July 17: SF Fed President Daly spoke at an economic conference in Idaho.
• Daly stated US tariffs’ inflation impact is more limited than initially expected.
• She reaffirmed the appropriateness of two rate cuts by the end of 2025.
• Inflation remains above the Federal Reserve’s 2% target, requiring further action.
• Prolonged high interest rates could harm the labor market unnecessarily.
• Daly noted businesses are mitigating tariff impacts by cost-shifting or avoidance.
• Recent CPI data shows goods prices rising, offset by slower service inflation.
• Daly expects policy rates to stabilize at or above 3% as inflation declines.
• Timing of rate cuts (July, September, or later) deemed less critical than the action itself.
• Daly emphasized avoiding unnecessary economic tightening that harms growth or jobs.
• She declined to comment on Trump’s criticism of Fed Chair Powell but highlighted equal responsibility among Fed policymakers.
Summary
San Francisco Federal Reserve President Mary Daly stated on July 17 that the inflationary impact of US tariffs under the Trump administration has been more limited than initially expected. Speaking at an economic conference in Idaho, Daly reiterated that two rate cuts by the end of 2025 are appropriate, as inflation remains above the Federal Reserve’s 2% target. She warned against maintaining restrictive interest rates for too long, which could harm the labor market. Businesses have found ways to mitigate tariff impacts, and recent CPI data shows rising goods prices offset by slower service inflation. Daly expects policy rates to stabilize at or above 3% as inflation eases, emphasizing the importance of rate cuts over their exact timing. She refrained from commenting on Trump’s criticism of Fed Chair Powell but stressed the shared responsibility of all Fed policymakers.
