Fed’s Daly comfortable with 2 rate cuts

FEDERAL RESERVE Bank of San Francisco President Mary Daly said she was still comfortable with projections the Fed released in March showing officials expect to lower interest rates twice before the end of the year.

“We want to keep the policy rate modestly restrictive for now until we are sure that inflation is going to hit that 2% target,” she told Fox Business. “So I’m still comfortable with the summary of economic projections, which we put up in December and in March, that said two rate cuts seem like a good forecast.”

The San Francisco Fed chief also said incoming information on the economy was “very positive,” and inflation data released on Friday showed “good relief for consumers.”

“But it’s an incomplete picture of what we have to look at as policymakers,” she said. “We have to look forward and there, there are risks.”

The Fed has kept rates unchanged so far this year, citing a strong economy and uncertainty over policy changes such as tariffs.

Economists warn President Donald J. Trump’s import levies could fuel inflation and slow growth, with the disorganized rollout making it hard for businesses and consumers to adapt.

Fed officials will next meet on June 17-18, when they’re widely expected to hold rates steady again.

Daly’s comments echoed remarks she made on April 18. Since then, a federal appeals court temporarily revived Mr. Trump’s tariff agenda on Thursday, a day after the US Court of International Trade blocked key parts of it, ruling his use of emergency powers went too far.

Ms. Daly also reiterated that monetary policy is in a “good place” to keep inflation on a downward path, and said officials could move one way or another as they get a clearer picture of the direction of the economy. — Bloomberg News