Fed’s Mary Daly says time is nearing for rate cuts — may need more than two
San Francisco Federal Reserve Bank President Mary Daly stated on Monday that with the growing evidence of a softening US job market and no signs of persistent tariff-driven inflation, it may be time for interest rate cuts.
“I was prepared to wait for another cycle, but I cannot wait indefinitely,” Daly said regarding the Fed’s recent decision to maintain short-term borrowing costs in the 4.25%-4.50% range instead of reducing them, as some of her colleagues suggested and as President Trump has requested.
While she mentioned that this doesn’t guarantee a rate cut in September, she expressed, “I am inclined to believe that every upcoming meeting is an opportunity to consider these policy adjustments.”
The two quarter-point interest-rate cuts that Fed policymakers anticipated for this year still seem like an appropriate adjustment, according to Daly. She emphasized the importance of these cuts happening, rather than the specific timing in September and December.
Daly suggested that there is a significant amount of data, including labor market and inflation reports, to be released before the Fed’s policy-setting meeting in September, and she remains open-minded.
“We could potentially make fewer than two rate cuts if inflation rises unexpectedly or if the labor market rebounds,” Daly noted. However, she also mentioned the possibility of needing more than two cuts if the labor market weakens without spillovers to inflation.
A recent Labor Department report indicated that US employers added only 73,000 jobs last month, with revisions showing an addition of just 33,000 jobs in the previous two months.
Despite these figures, Daly believes that the job market is not in a precarious state, as raw employment numbers can be less informative during economic uncertainties. She pointed out that indicators like the unemployment rate, which rose slightly to 4.2% in July, provide more insight.
cuts Dalysays FedsMary nearing rate time
