Investing.com -- Mary Daly, the President of the San Francisco Federal Reserve Bank, continues to view two interest-rate cuts this year as a "reasonable" projection. She emphasized the strength of the labor market, steady economic growth, and declining inflation as reasons for policymakers to wait before reducing rates to see how businesses will adjust to tariff costs.

Daly spoke by phone from Fairbanks, Alaska, late Thursday, where she reported that local business and community leaders are expecting tariffs to raise their costs. They are currently strategizing on how to find workarounds for this situation. They also anticipate that some levies will be relaxed over time or exceptions will be made.

Inflation, according to Daly, has decreased from its peak. The Fed’s interest-rate cuts last year have made previously postponed business projects viable, leading to their implementation.

She stated, "We have no reason to rush to judgment because policy is in a good place, the economy is in a good place, and so we can take the time that is needed to really assess the total impact, to learn the scope, magnitude, and timing of the actual final tariff packages, and then also learn about the impact on the economy."

Last week, U.S. central bankers maintained their policy rate in the 4.25%-4.50% range. Most of them indicated that two quarter-of-a-percentage-point interest-rate cuts by the end of the year would likely be appropriate. This is consistent with the rate-path signal they gave in December.

Daly’s stance remains unchanged since last year. She explained, "We need to give the new administration and the industries that are being affected by it time to understand what’s being changed and adjust to those changes and then see the impact it has on prices and growth and the labor market. And right now, we just don’t know."

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