Fed's Daly: Rate cuts to resume, but policy rate remains dependent on inflation declines

Joshua Gibson FXStreet

Federal Reserve (Fed) Bank of San Francisco President Mary Daly noted late Monday that while she expects the Fed to continue slowly easing interest rates lower in the coming quarters, the Fed is still maintaining a data-dependent approach.

Key highlights

Daly sees ongoing rate cuts in the near future.

Labor market slowdown is unwanted.

No reason to halt rate cuts, monetary policy remains tight.

Businesses are reporting headcount management through attrition, not layoffs.

Soft landing best achieved by adjusting policy rates as inflation declines.

Consumers' shift to lower-priced items demonstrates restricted pricing influence.

Neutral rate estimate at 2.5% to 3%.

Fed will learn through experience where neutral rate is.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

GBP/USD stays weak near 1.3250 on resurgent USD demand

GBP/USD stays weak near 1.3250 in European trading on Tuesday, reversing a part of the previous day's advance to a one-week high. The pair ditches a three-day winning streak, undermined by the USD/JPY upsurge-led broad US Dollar rebound. US jobs data in next in focus.

EUR/USD keeps the red near 1.1400 on firmer US Dollar

EUR/USD remains in the red near 1.1400 in early Europe on Tuesday, snapping a three-day winning streak amid a firmer US Dollar. The pair trades with caution ahead of Germany's preliminary inflation readings and the US JOLTS Job Openings Survey.

Gold recovers early lost ground to YTD low; Fed hike bets and firmer USD to cap upside

Gold builds on its intraday recovery from the lowest level since November 2025, touched earlier this Tuesday, and climbs to the top end of its daily range heading into the European session. Any meaningful appreciation still seems elusive in the wake of a broadly firmer US Dollar. Against the backdrop of renewed Mideast tensions, mixed signals on US-Iran talks assist the USD to stall its recent pullback from the highest level since May 2025.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.