According to Daly, Federal Reserve officials have not been given specific instructions by the Trump Administration on how to carry out their duties. The central bank has been operating independently from the White House since 1913, aiming to harmonize policies that maintain low inflation rates while fostering economic expansion. “All administrations share the same objectives,” she stated in an interview with the Arizona Republic, emphasizing economic growth, stable employment, and controlled inflation.
Daly, who plays a role in determining the Fed’s interest rate policies, mentioned that there has not been an unusually high level of concern from bankers or businesses regarding the Trump Administration’s stricter immigration policies and their potential impact on employment, as well as the implementation of tariffs. However, some companies are observed to be increasing their inventory holdings.
Further details: Departing regulator Barr cautions against relaxing bank regulations
Decrease in bank failures lately
Daly had previously visited Phoenix in October 2023, discussing the steady progress in reducing inflation, which was then at approximately 3.7%. This visit occurred following three significant bank collapses in early 2023, including Silicon Valley Bank, which had operations in Arizona. Despite this, Daly noted that banks are currently in a “very good position.”
The banking sector is continuing to consolidate, although failure rates remain low. The number of banks insured by the Federal Deposit Insurance Corp. decreased by 21 to 4,517 during the third quarter of 2024. Most of the banks that ceased to exist merged with others. Only one bank failed in 2024, as per FDIC reports, with another failing in 2025—Pulaski Savings Bank of Chicago.
Bankers express discontent over regulations
Small and local community bankers have expressed dissatisfaction with what they deem as excessive regulations for years. With a new administration in power, John Asbury, chair of the American Bankers Association, anticipates a more practical regulatory framework, comprising fewer convoluted rules that bankers often find challenging to implement.
Federal Reserve Governor Michelle Bowman made her inaugural public statements as a Fed policymaker during an American Bankers Association conference in San Diego, California, on February 11, 2019. The association opposes the federal Community Reinvestment Act, intended to promote lending to low-income and other underserved groups, arguing that it discourages bankers from offering certain products or extending loans beyond their local networks.
Amid concerns raised by bankers regarding regulations, Daly cautioned against inadequate oversight, emphasizing the importance of balancing consumer protection and the stability of the financial system with the costs to financial institutions, innovation, and economic growth.
Inflation steps forward on a “challenging” trajectory
During the conference, Federal Reserve Board Governor Michelle Bowman predicted a gradual easing of inflation in the later stages.
This year, there may be some challenges and fluctuations in progress, and the Federal Reserve’s target of achieving 2% inflation may continue to be difficult to reach. Currently, the nation’s inflation rate is at 3%, although it is lower in the metro Phoenix area at 1.6%. Bowman disagreed with the Fed’s decision last year to reduce interest rates, expressing concerns that the economy was too robust to warrant such a cut. However, she now views the Fed’s stance as being in a favorable position, which allows her and her colleagues to exercise patience and closely monitor the evolving inflation data.
During a speech to a group of bankers, Bowman emphasized that the economy remains robust, with steady growth in economic activities and a labor market that is approaching full employment. She mentioned that the banking system is healthy, and the ongoing battle against inflation is progressing as planned. For more information, contact the writer at russ.wiles@arizonarepublic.com. This article was initially published on the Arizona Republic: Fed official: Banking system healthy, inflation battle on track.
