Fed’s Mary Daly Drops Bombshell: Rate Cuts Looming in 2025

San Francisco Fed President Mary Daly just lit the fuse on the next big monetary policy shift—and markets are primed to explode.

The Hawk-to-Dove Pivot

Daly's latest comments signal the Fed's readiness to abandon its inflation-fighting posture. After 18 months of economic pain, the central bank appears desperate to flip the script before the 2026 election cycle.

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The Fed's credibility hangs by a thread while traders place bets on how many cuts we'll get before Wall Street bankers need another bailout. Some things never change.

Inflation and Labor Market Insights

In her assessment, Daly pointed out that inflation remains stable, and the Federal Reserve’s inflation target is within reach. She also noted that the labor market is showing signs of slight weakening, which could pose economic risks. The ongoing weakness in the labor market could increase the risks of maintaining high interest rates for an extended period.

Experts assert that the Federal Reserve considers inflation and employment data when determining its policy interest rate, striving to balance these two indicators. Daly’s comments suggest that the decision-making process is closely monitoring current economic conditions.

Strategic Rate Cut Timing

Daly underlined the importance of timely rate cuts, hinting that current conditions might necessitate multiple reductions. It is possible that two or more rate cuts could occur by the year’s end. Economic developments indicate that the Federal Reserve’s actions will be aimed at safeguarding the labor market and ensuring price stability. Daly’s statements serve to inform the public on the Fed’s future monetary policy decisions.

Federal Reserve officials emphasize supporting employment as much as controlling inflation as a priority. Consequently, rate cut decisions are considered within the broader economic policy framework. Currently, the supporters of a rate cut include Bowman and Waller, with Daly joining them. TRUMP is expected to appoint a rate cut supporter in place of the resigned Kugler, raising the number to four. Seven votes are needed for a cut, requiring Trump to persuade or independently convince three more Fed members so a rate cut can proceed, even if Powell opposes. However, four dissenting votes in the September rate decision alone could pressure Powell significantly.

In conclusion, experts are evaluating the possibility of the Federal Reserve loosening its monetary policy in the NEAR future. Mary Daly’s remarks align with these expectations. Nonetheless, any rate cut decisions will be contingent on both market conditions and new data.