Fed official sees possible interest rate cut this fall

San Francisco Federal Reserve President Mary Daly recently shared that the U.S. central bank might lower interest rates this fall if tariffs don’t cause a big rise in prices. In a Bloomberg Television interview, she explained that her main prediction has been for rates to adjust in the fall, and she hasn’t changed her mind. Daly pointed out that tariffs could affect prices in three ways: a lasting increase in inflation, a one-time price jump, or little to no impact.

While she doesn’t expect the minimal impact to be the most likely, she noted it’s becoming more possible. Daly said the current economy is in a good spot, with steady interest rates held through all four Federal Reserve meetings this year. The Fed is closely watching how tariffs, government spending, and other policies from the Trump administration might influence the economy. Although some worry tariffs could spark inflation, Daly suggested the effect might be smaller than expected.

If tariffs don’t push prices up significantly, it could support the case for a rate cut. She also mentioned the job market is cooling, but not in a concerning way. Daly emphasized the Fed’s careful approach, as they want to see more data before deciding. This wait-and-see strategy comes as the Fed balances economic growth and price stability, especially with global trade tensions and other uncertainties on the horizon.