Mary Daly on the Fed’s Cut, the 2025 Outlook, and AI
Why cut when inflation is still above target?
Mary Daly, president of the Federal Reserve Bank of San Francisco, during the Macroeconomics and Monetary Policy Conference at the Federal Reserve Bank of San Francisco in San Francisco, California, US, on Friday, March 29, 2024.
Photographer: David Paul Morris/BloombergLast week, the Federal Reserve cut benchmark rates by 25 basis points, but simultaneously signaled a slower pace of cuts for next year. The guidance surprised markets and sparked a selloff in both stocks and bonds as traders adjusted to the new forecast. So what made the Fed change its stance? And where do the balance of risks to the economy lie right now? In this episode, we speak with Federal Reserve Bank of San Francisco President Mary Daly about how she's viewing the outlook for both inflation and the labor market. We also talk about the impact of AI on productivity, and how she's thinking about the potential impact of new policies from the incoming Trump administration. The transcript has been lightly edited for clarity.