San Francisco Fed President Mary Daly signaled clear support for a rate cut at next month’s FOMC meeting, telling the Wall Street Journal that the Fed now faces greater risk from a sudden deterioration in the labor market than from another inflation flare-up.
She said the job market is “vulnerable enough now” that the risk of a sharp, “nonlinear” weakening is rising, leaving policymakers with less room to react if they wait too long. Daly emphasized that she no longer feels confident the Fed can “get ahead of” labor-market weakening, arguing that the damage from a sudden drop in hiring would be harder to manage than moderating inflation.
On inflation, Daly said the chance of a meaningful reacceleration appears limited, pointing to softer-than-expected tariff-related cost increases this year.
