Mary Daly, President of the Federal Reserve Bank of San Francisco, suggested that two Federal Open Market Committee (FOMC) rate cuts seem suitable for 2025. She expressed contentment with the Fed’s July decision but felt uncertain about repeating it many times.<\/p>\n
Daly mentioned that two rate cuts this year might be necessary for recalibration, but fewer adjustments could also be possible. She emphasised that each meeting remains open for policy changes and showed readiness to defer actions but admitted that delays cannot last indefinitely.<\/p>\n
Uncertainty exists around whether a rate cut in September is needed, with the job market showing softening trends. Daly saw no ongoing tariff impact on inflation and stressed the importance of acting promptly based on available data.<\/p>\n
In her overall viewpoint, Daly appeared inclined towards considering rate cuts sooner due to economic uncertainty.<\/p>\n
Recent commentary indicates a strong likelihood of two interest rate cuts in 2025, with the first potentially arriving in September. This dovish pivot is a direct response to a visibly softening job market, as the July 2025 jobs report showed nonfarm payrolls adding just 175,000, marking the third consecutive month of slowing growth. This weakening labor data gives the Federal Reserve the justification it needs to begin recalibrating policy.<\/p>\n
The path for these cuts is further cleared by favorable inflation trends, which are now firmly moving in the right direction. We saw the latest core Consumer Price Index for July dip to 2.8%, its lowest level since early 2023, giving policymakers a green light to act without fearing a price resurgence. This reinforces the view that any tariff effects have not been persistent, removing a key obstacle for easing monetary policy.<\/p>\n
In response, we see traders aggressively pricing in these rate cuts, with the CME FedWatch Tool now showing over an 80% probability of a 25-basis-point cut at the September meeting. This sentiment is clearly visible in the bond market, where the 2-year Treasury yield, highly sensitive to Fed policy, fell below 4.10% last week. Derivative traders should consider positioning for lower yields through instruments like SOFR futures.<\/p>\n
For equity derivative traders, this environment favors strategies that benefit from rising stock prices, as lower borrowing costs act as a significant tailwind for corporate earnings. We are looking at bullish positions, such as buying call options or selling put spreads on indices like the S&P 500, particularly on any market weakness leading into the meeting. The focus is on capturing the upside from a more accommodative policy stance.<\/p>\n
With every upcoming meeting described as ‘live,’ a significant increase in implied volatility is expected around the FOMC announcements. Traders should therefore anticipate sharp market moves and might consider buying VIX options as a hedge or a direct bet on this coming uncertainty. The stated need for decisive action means the September decision carries more weight than it did just a few months ago.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Mary Daly anticipates potential 2025 rate cuts, citing economic uncertainty and emphasizing data-driven policy flexibility.<\/p>\n","protected":false},"author":62,"featured_media":17024,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28163","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28163","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28163"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28163\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17024"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28163"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28163"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28163"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}