Fed's Daly sees time to tread slowly, carefully on policy

(Reuters) -San Francisco Federal Reserve Bank President Mary Daly on Tuesday became the latest U.S. central banker to say there's no rush to cut interest rates, what with the economy and the labor market still solid and a lot still unclear about the size and scope of U.S. President Donald Trump's tariffs.

Though "a little concerned" that tariffs might lift inflation, at least temporarily, "with growth good and policy in a good place, we have built the time and the ability to just tread slowly and tread carefully," Daly said at Brigham Young University in Provo, Utah. 

Trump announced tariffs last Wednesday that would increase import levies around tenfold to more than 20%, the highest in a century, and global stocks swooned in the days that followed on fears that the escalating trade war would cause a recession.

On Tuesday U.S. stocks recovered some of those losses on hopes the U.S. would strike trade agreements with some countries.

Meanwhile traders in financial markets are increasingly betting the Fed will act quickly to respond to a potential slowdown, with interest-rate futures now pricing next month as the likely start to what's expected to be at least a full percentage point of policy rate reductions by year-end.

Though Daly did not specify her preferred rate path, she gave no sense she felt such aggressive action is warranted, at least for now.

"The thing that's really important is you stay steady in the boat while you think about not what's happening over the last two days, but the net effect of the slate of changes that any administration wants to take," she said.

Businesses remain optimistic, and have a lot of practice working through uncertainty of the type they face now, she said. 

(Reporting by Ann Saphir; Editing by Chris Reese and Andrea Ricci)