San Francisco Fed President Mary Daly said today that the Fed should immediately cut interest rates as he believes the labor market slowdown and the impact of tariffs will be short-term.
“Inflation is slowly decreasing without tariffs. We expect inflation to continue its downward trend as the economy is slowing and monetary policy is strict.” While acknowledging that tariffs will boost inflation in the short term, Daly noted that the effect is not permanent.
Daly also highlighted the weakening of the labour market, saying, “The labour market is already weak. If the labour market deteriorates, further slowdowns will be of concern as it usually decreases rapidly and rapidly. All of this suggests that it will need to be adjusted within the next few months.”
Daly also noted that much work is being done to reduce inflation to a 2% target. He said monetary policy must be readjusted to address the various risks affecting the Fed's goals, and that action must be taken before uncertainty is fully resolved.
“Taxes are unlikely to push inflation up forever in the long term, so monetary policy may not need to counter this effect,” Daly said.
*This is not investment advice.
