San Francisco Fed President Mary Daly shared insights on the current economic situation in the U.S., particularly regarding the labor market and interest rate policy.
Labor Market Weakness
Mary Daly expressed the view that current economic conditions may require more rate cuts than planned by the Fed this year. She noted that recent labor market data shows a slowdown in job growth, with only 73,000 new jobs created in July 2025, significantly less than in previous months. Daly emphasized that there is a clear deceleration in employment growth compared to the same period last year.
Fed Support and Expectations
Daly supported the Fed’s decision to keep interest rates steady at 4.25% to 4.50%, but cautioned that such a stance cannot last much longer. She indicated that upcoming Fed meetings will be 'live', meaning policy changes are possible depending on fresh economic data. Daly stated that if the labor market continues to weaken while inflation remains subdued, more than two rate cuts may be necessary.
Revisiting Economic Policy
Daly highlighted that the Fed must carefully balance the goals of price stability and full employment. While inflation is contained, the labor market remains a concern. She noted the importance of acting preemptively to avoid negative economic consequences, as inaction regarding labor could undermine efforts to stimulate the economy.
Mary Daly emphasizes the need for careful monitoring of the labor market and the Fed's readiness to act in order to prevent further economic slowdown.
