FED Official Daly Gave a Date for Interest Rate Cut This Time!

FED official Mary Daly stated in her remarks that the US economy is currently in "good shape" and that the monetary policy is also "balanced."

Daly stated that the impact of the recently raised customs duties on inflation does not appear to be as serious as initially reported, while also expressing that the continuous decline in inflation is a positive development.

"Economic fundamentals are moving toward the prospect of a rate cut," Daly said. However, despite this, he said that a rate cut could be more appropriate in the autumn months as long as he does not see a significant weakening in the labor market.

A Fed member also stated that caution should be exercised regarding the future trajectory of customs duties, saying, "Other potential customs duty measures may not have as large an impact on inflation as is thought." However, he also added that it is unclear to what extent these measures will be passed on to consumers.

On the other hand, the new FED economic forecasts announced this week indicate that growth will slow down and inflation will rise somewhat. However, FED officials still anticipate that there will be a rate cut this year. This situation shows that they acknowledge that tariffs will put pressure on prices, but they believe this effect will not be long-lasting.

However, there are notable disagreements within the FED. Seven of the 19 officials argue that there should be no interest rate cuts this year, while eight foresee two interest rate cuts. This view aligns with investors' expectations of two 25 basis point interest rate cuts in September and December. Two officials expect one rate cut, while two officials expect three rate cuts.

*This is not investment advice.

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