San Francisco Fed’s Daly says jobs report complicates interest rate call

San Francisco Federal Reserve President Mary Daly expressed concerns about the recent weak February jobs report, stating that it adds to the complexity of the policymaking environment. In an interview with CNBC, Daly refrained from committing to a specific position on interest rates but highlighted the challenges posed by a softening labor market and inflation persistently exceeding the central bank’s 2% target.

Daly emphasized the significance of the latest jobs market report, noting that while it should not be disregarded, it should also not be overemphasized as it represents just one month of data. The Bureau of Labor Statistics reported a decline of 92,000 nonfarm payrolls in February, contrary to expectations for a gain of 50,000, marking the third decrease in jobs over the past five months.

Given the mounting concerns surrounding the labor market, the Federal Reserve implemented three interest rate cuts in the latter part of 2025 and has since adopted a more cautious approach, particularly in light of inflation persisting above target and the potential impact of global events such as the Iran war. Daly underscored the current challenges faced by the Fed, stating that the environment differs significantly from when inflation was below target and necessitates a careful balancing of risks.

Following the release of the report, futures traders adjusted their expectations for rate cuts, bringing forward the next anticipated cut to July and increasing the likelihood of two reductions by the year’s end. Daly emphasized the importance of exercising caution in a climate where the stability of the labor market remains uncertain, indicating that more time and data are needed before considering any policy adjustments.

While Daly does not have a vote on the rate-setting Federal Open Market Committee this year, she will resume voting in 2027. The interview with Daly provides valuable insights into the Fed’s current deliberations and the factors influencing its decision-making process.

For more in-depth analysis and coverage of crucial economic developments, viewers can watch the full interview with San Francisco Fed President Mary Daly on CNBC. Stay informed with CNBC as your preferred source on Google, ensuring you never miss essential updates from the most trusted name in business news.