Fed’s Mary Daly Urges Extreme Caution on Rate Cuts—Markets Brace for Impact

San Francisco Fed President Mary Daly just dropped a truth bomb: The central bank won't be rushed into slashing rates. Here's why traders are sweating.

The Hawkish Reality Check

Daly's warning shot comes as Wall Street gambles on premature rate cuts—another classic case of markets getting high on their own supply of hopium.

Inflation's Ghost Still Haunts

With core CPI still floating above target, Daly's crew appears determined to avoid replaying the 1970s stagflation horror show. Translation: Your leveraged crypto longs might need to suffer a while longer.

The Crypto Angle

Risk assets just got served notice. Every day rates stay high is another day DeFi yields look less sexy against 'risk-free' T-bills. But hey—at least the Fed's hesitation gives you more time to DCA before the eventual pivot sends BTC to new ATHs.

Funny how the 'data-dependent' Fed suddenly remembers historical context when Wall Street starts begging for candy.

Interest Rate Cut Possibility and Timing

Daly provided a detailed assessment of the Fed’s future plans regarding interest rate cuts, urging that immediate action should not be anticipated. She acknowledged that interest rates WOULD be reevaluated in light of economic developments, suggesting a responsive approach to changing conditions.

Emphasizing the importance of caution, Daly stressed that market expectations around interest rate cuts should be approached prudently. The Fed is committed to making determinations based on economic indicators and macroeconomic variables, rather than solely relying on expectations. Her remarks point to a cautious evaluation of immediate interest rate cut expectations.

Interest Rate Cuts and Political Pressures

At the time of these statements, Donald TRUMP was continuing to exert pressure on Fed policies in the United States. Financial circles widely believe Trump is openly urging an acceleration of interest rate cuts. Within this context, Daly foresaw the possibility of up to two cuts within the year.

While underscoring the Fed’s autonomous decision-making process, Daly emphasized that their focus would be on economic data rather than social and political influences. This reiterated the importance of the Fed remaining independent of political pressures.

Her statements indicate the Fed’s commitment to managing policy tools transparently and predictably. Additionally, global and local economic developments are being closely monitored.

Mary Daly’s recent declarations reveal that the Fed’s decision-making processes will be grounded in economic data and insulated from political influences. In this framework, close attention is given to whether market expectations align with macroeconomic indicators. Efforts to maintain the Fed’s independence are upheld while prioritizing transparency and stability in economic decisions.