(Bloomberg) -- Federal Reserve Bank of San Francisco President Mary Daly said monetary policy is in a “good place” to continue to bring inflation down.
Daly said she doesn’t necessarily expect inflation to reach the central bank’s 2% goal this year, but she emphasized officials are making progress. She expects inflation will continue to decline over time as the labor market slows but remains solid.
Fed policymakers have held interest rates steady so far this year. Officials have said a still-solid economy offers them room to wait for further clarity on a variety of government policy changes, notably tariffs, and their impact on the economy.
“The net net is businesses are still waiting to see, and as they wait to see, we wait to see, because we have policy in a good place for the economy we have,” Daly said in a moderated conversation in Oakland, California. “We have plenty of opportunity then in time to make decisions as the economy evolves.”
Daly said the labor market is in “solid shape.” She noted it may take workers a little longer to find a job, but that is the balance needed to ensure a sustainable job market that is consistent with 2% inflation.
Economists largely see President Donald Trump’s widespread tariffs adding to inflation and weighing on economic growth. The administration’s chaotic roll out of a range of levies has also made it challenging for businesses to make decisions on hiring and investment.
Much remains uncertain. The US Court of International Trade introduced even more uncertainty with a ruling Wednesday that blocked sweeping parts of Trump’s tariffs. The administration appealed, and on Thursday a federal appeals court temporarily paused that ruling while it weighs a longer lasting stay sought by the government.
Political Pressure
When asked about Trump’s pressure on the Fed to lower interest rates, Daly said it’s not the first time an administration has asked the US central bank to move in a way the president prefers.
She said that’s “part of the job” and emphasized the Fed will do what’s right to achieve its congressionally mandated goals of price stability and full employment.
Earlier Thursday, Trump and Fed Chair Jerome Powell met in the White House for their first in-person meeting since the president’s inauguration. The president told Powell that he believes the Fed chair is making a mistake by not lowering rates, White House Press Secretary Karoline Leavitt said.
Powell told the president Fed officials will make decisions based solely on “careful, objective, and non-political analysis,” the central bank said in a statement.
--With assistance from María Paula Mijares Torres.