Fed’s Daly: One or two more cuts likely this year

San Francisco Fed President Mary Daly expressed a cautious stance on monetary policy in a discussion last night, indicating that “two more cuts this year, or one more cut this year, really spans the range” of likely outcomes.

With inflation cooling, she noted that inflation-adjusted rates have been rising, which could overburden an economy nearing Fed’s employment and inflation targets. Daly warned that such conditions could “break the economy,” stating her desire to prevent further slowing in the labor market.

In a separate speech, Boston Fed President Susan Collins reinforced this measured approach, stating that she supported Fed’s initial 50bps cut and sees further adjustments as likely.

Collins emphasized the importance of a “careful, data-based approach” as rates are lowered to support the economy while ensuring policy remains adaptable to incoming data.