Federal Reserve's Daly: "Very satisfied" with median estimate of two rate cuts in 2025.

San Francisco Fed President Mary Daly said she is "very satisfied" with her estimate of two interest rate cuts next year by policymakers, emphasizing that the Federal Reserve could shift towards a slower pace of rate cuts. Daly said in an interview, "My forecast is that the number of rate cuts next year will be much fewer than we imagined. But I will monitor the economic situation to see if this is feasible." After three consecutive rate cuts, the Federal Reserve this week hinted at a significant slowdown in rate cuts next year. Daly described the Fed's latest rate cut as a "daring decision." She said, "Now I feel like we have passed the readjustment phase and have entered the next stage." "The next stage is to truly examine the incoming information. We can return to the more typical gradual mode of the Federal Reserve." Policymakers estimate that there may only be two rate cuts by 2025, as efforts to bring inflation down to the 2% target are progressing slowly and the labor market remains robust. Daly said that recent data, rather than the policies proposed by President-elect Trump, are the basis for her latest economic forecasts. Federal Reserve officials currently expect inflation to reach 2.5% by the end of next year, higher than the median 2.1% in September. The latest projections show that policymakers currently expect it to take until 2027 to achieve the 2% target. Some economists predict that the upcoming Trump administration's proposed tax cuts, large-scale deportation of illegal immigrants, and new tariff plans could exacerbate inflation, further complicating the situation. Federal Reserve Chairman Powell said at a press conference after this week's rate decision that some of his colleagues have already begun incorporating potential changes in fiscal policy into their forecasts. When asked about tariffs, Daly said that while the economy is strong, the situation is different from the previous round of tariff negotiations when inflation was below the Federal Reserve's target. Daly said, "Inflation is already above 2%, so we must work to bring inflation down to 2%."