Federal Reserve Chair Janet Yellen: Two rate cuts before the end of the year is reasonable, waiting too long could harm the labor market!

Cailian Press, July 18th (Editor: Huang Junzhi)
Mary Daly, the Governor of the Federal Reserve Bank of San Francisco, reiterated on Thursday that it is “reasonable” to expect another rate cut by the end of this year, especially given the smaller impact of President Trump’s tariffs than initially anticipated.
During a Rocky Mountain Economic Summit held in Victor, Idaho, Daly stated that the latest interest rate forecast released by Fed officials in June provides a “reasonable outlook,” indicating that two rate cuts will be made before the end of the year.
She pointed out that the inflation rate remains above the Fed’s 2% target, and there is still “some work to do” to reduce inflation. However, she said,
The Fed also does not wish to keep interest rates capped for too long, as this would unnecessarily harm the labor market.
“I think we don’t need to rush to slow down the pace of rate cuts to complete the last step in curbing inflation. I don’t want to see further weakness in the labor market… I really don’t want to see that situation. That’s why you can’t always wait for rate cuts,” she added.
“You can’t just wait forever because if we wait until inflation reaches 2%, then we’ve lost, and probably done damage to the economy in an entirely unnecessary way,” she added.
Currently, businesses are seeking ways to avoid tariffs without passing all increased costs onto customers. Despite Trump’s actual average tariff rate doubling, import tariffs have not yet had a broader impact on overall inflation.
Daly mentioned, “We haven’t seen any signs of this happening,” although recent consumer price data indeed shows rising commodity prices. However, she noted that, offset against this, services related to housing have lower inflation, which is encouraging.
When asked about whether she would support a rate cut at the Fed meeting two weeks later, Daly indicated that she expects the Fed to continue cutting rates as inflation falls, eventually setting its policy rate at 3% or higher.
Whether it’s a rate cut in July or September, it’s not the most important thing. What’s more crucial is that interest rates will decrease.
We do not want to unnecessarily tighten the economy, harm the labor market or economic growth. So that’s the direction we should be moving.”
Regarding Trump’s recent attacks on the Fed Chair, Daly declined to comment, but she pointed out that all Fed policymakers were involved in the decision-making process regarding interest rates.
“When we vote on interest rates, we share equal responsibilities,” she added.
On the same day, Fed Board member Waller issued the strongest call for a rate cut so far in July, arguing that any inflation caused by tariffs will be temporary.
He stated, “We should cut policy rates at our meeting in two weeks.” Waller believes that the Fed’s policy rate should be at 3%, 125-150 basis points lower than the current 4.25%-4.5%.