Yeliz Akmaca 
Mary Daly, President of the Federal Reserve Bank of San Francisco and a member of the U.S. Federal Reserve (Fed), stated that it is still unclear whether a rate cut will be appropriate in September. Emphasizing the complexity of the macroeconomic outlook, Daly said a cautious approach in monetary policy continues.
Fed Keeps Rates Steady, Markets Expect a Cut in September
The Fed kept its policy rate steady at 4.50% during its July meeting. Following this decision, futures markets show that investors are pricing in a 68% probability of at least a 25-basis-point rate cut in September. This suggests that expectations for a rate cut are strengthening.
Daly stated, “We can’t afford to waste more time figuring out whether inflation is persistent. We must shape our decisions based on the most likely scenario,” highlighting the need for a careful but not overly delayed approach to rate cuts.
She reminded that two rate cuts are still on the table, adding, “Fewer rate cuts may also be possible. However, current data may point to the need for further cuts.”
Assessing the labor market, Daly said there hasn’t been a critical weakening in employment. However, she noted that the ongoing softening trend could lead to undesirable outcomes if it deepens.
The Fed official also said that it was reasonable to be patient with the decision made in July, but emphasized that “infinite patience” cannot be a policy strategy. Daly added that they have not seen any indication that tariffs are putting persistent pressure on inflation.
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