Federal Reserve (Fed) Bank San Francisco President Mary C. Daly noted on Wednesday that although she supports rate cuts, there is only so much that pressing interest rates down to neutral can accomplish on the stability front.

Key highlights

Further policy adjustments likely will be needed, as the Fed works to restore price stability and provide needed support to the labor market.
The labor market has slowed and inflation has risen less than expected.
I fully supported the Fed's quarter-point rate cut last week.
Risks to the economy had shifted, it was time to act.
Fed's rate-path projections are not promises; we will need to assess tradeoffs at each decision point.
It is hard to say if further rate cuts will come now, later this year, or when.
The labor market is not weak.
The labor market is not as speedy as it was - it's sustainable, and I don't want to see further softening.
The rate cut was like taking out insurance on the labor market.
Once the labor market tips into weakness, it's hard to get it back out.
This is not stagflation.
We have work to do on inflation, and we don't want the labor market to get weak.
Recession risk is very low right now.
Inflation excluding tariffs roughly 2.4% to 2.5%.
The economy still needs monetary bridling, but not as much.
The evidence is consistent with tariffs having a one-time impact on inflation.
Interest rate cut will help a little on housing, but even bringing it down to neutral won't fix supply issues that are hurting affordability.