Fed President Warns That Holding Rates too Long Will Damage Job Growth
San Francisco Federal Reserve President Mary Daly has hinted the central bank may need to move on interest rate cuts sooner than planned — and possibly more than twice this year — as signs of labor market weakness mount.
Daly told reporters that holding rates steady for too long risks damaging job growth and missing the right moment to adjust policy. July’s disappointing payroll data, with just 73,000 new jobs and unemployment edging up to 4.2%, added to her concerns. She said broader indicators also show a consistent slowdown in hiring.
While Daly backed the Fed’s July pause, she now believes a September cut is firmly on the table, though she stopped short of committing to it. Every meeting going forward, she said, should include serious debate over lowering rates, stressing the need to respond quickly rather than waiting months for more inflation data.
The Fed’s current plan still calls for two cuts this year, but Daly left the door open to more if job market softness persists. She also dismissed fears that new tariffs will trigger inflation, noting there’s no evidence trade-related price hikes are pressuring the economy.
Her comments come as President Donald Trump continues urging immediate cuts and moves to appoint a pro-cut Fed governor. Markets are already betting heavily on a September move, with CME FedWatch showing a 94.4% chance of rates dropping from 4.25%–4.50% to 4.00%–4.25%.
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