Recent events in the financial markets have drawn attention to comments from Fed officials regarding the state of inflation and monetary policy.
Inflation Slowdown and Its Implications
Last week, Mary Daly, who heads the San Francisco Fed, noted that the recent inflation data, specifically a 2.1% rise in April's personal consumption expenditures, brings some relief to Americans. However, she also indicated that this number is not a complete indicator. "It's an incomplete picture of what we have to look at as policymakers," she stated.
Trump's Meeting with Fed Chair
The day before Daly's interview, President Donald Trump met with Fed Chair Jerome Powell at the White House. The meeting addressed economic issues, including inflation and growth. Trump has repeatedly pressured the Fed to cut interest rates, suggesting he disagrees with the current economic policy. The White House Press Secretary confirmed that Trump expressed his belief in the necessity of lower rates, claiming it puts the U.S. economy at a disadvantage against China.
Fed's Strategy and Future Actions
Daly also emphasized that despite the positive data, the Fed is not planning to make sharp moves in its policy. She believes that the economy is in a good place, and rate cuts in 2025 could be possible if inflation continues to cool. However, she stressed the need to maintain a "modestly restrictive" policy until the inflation target of 2% is achieved.
Thus, Fed representatives, including Mary Daly, highlight that despite the optimistic inflation data, the central bank is still closely monitoring the economic situation and is not rushing to make changes in its policy.
