In an in-depth interview with FOX Business’ Edward Lawrence, Federal Reserve Bank of San Francisco President Mary Daly delves into crucial aspects such as the next rate decisions, maintaining the economy in a favorable state, and the potential ramifications of a potential second Trump administration. As the U.S. economy gears up for the end of 2024 and takes center stage, Daly provides detailed insights into how Trump's tariffs and rate decisions could shape market dynamics.

Unraveling the Impact of Tariffs on the Economy with Mary Daly

Next Rate Decisions and the Economy

In an exclusive interview, Mary Daly emphasized the significance of carefully considering the next rate decisions. She explained that maintaining the economy in a good place requires a delicate balance. "We need to continuously assess the economic conditions and make adjustments to policy accordingly. A rate cut in December is not a certainty, but it remains a possibility as we strive to ensure a durable expansion with low inflation," she stated. This careful approach shows the Fed's commitment to guiding the economy towards stability.There is a sense of caution among economists as they await the Fed's next move. The economy is complex and dynamic, and rate decisions have far-reaching implications. Daly's insights shed light on the thought process behind these decisions and the importance of making them based on a comprehensive understanding of the economic landscape.

Impact of Tariffs on the Economy

When discussing the potential impact of tariffs, Daly highlighted the need for a nuanced analysis. "We've seen trade issues and tariffs before, and the economy has shown an ability to adjust. It doesn't usually lead to a derailment of growth, but it does require careful monitoring," she said.For example, when considering a 10% tariff on goods imported through the Port of Los Angeles, there are multiple factors at play. The types of goods being tariffed, how firms in the U.S. respond to the changes, and the actions of other global players all contribute to the overall economic outcome. Daly's perspective helps to clarify the complexity of these issues and the importance of a well-thought-out approach.In a subsequent Truth Social post, Trump's proposed additional 10% tariff on all Chinese goods due to the flow of illegal drugs emphasizes the significance of these trade policies. Daly clarified that the Fed does not have a tariff forecast model, as it falls into the realm of hypotheticals. However, she also emphasized the need to be prepared to assess the situation as it unfolds.

Keeping the Economy in a Good Place

Daly stressed the importance of keeping the economy in a good place. "Our goal is to ensure a sustainable expansion with low inflation. This requires ongoing recalibration of policy to adapt to changing economic conditions," she said.She also noted that while the economy is currently in a favorable position, it is essential to remain vigilant. "We can't take anything for granted. The global economy is complex, and there are always risks and uncertainties that we need to address," she added.Daly's views provide valuable guidance for policymakers and investors alike. Her emphasis on a proactive and flexible approach to economic management highlights the need for continuous monitoring and adjustment to ensure the long-term health of the economy.FOX Business’ Breck Dumas contributed to this report.