San Francisco Federal Reserve President Mary Daly stated on Monday that the U.S. economy might need more than the two planned interest rate cuts this year. She pointed to a weakening job market as the primary reason for her concern.
The State of the Economy
Daly highlighted that while the labor market isn’t in a full-blown crisis, job creation has slowed noticeably. She cited a report showing only 73,000 new jobs in July 2025, with revised figures for May and June adding only 33,000 jobs combined. She described the labor market as “mostly bad” and an “unwelcome development.”
On the other hand, she noted that inflation remains contained, even with new tariffs. This gives the Fed more flexibility to adjust monetary policy without risking a broad increase in prices.
The Fed’s Next Steps
Daly confirmed her support for the Fed’s decision to keep rates steady last month but stressed that holding off on cuts for much longer is not sustainable. She emphasized that the two quarter-point cuts penciled in for this year are still appropriate but that more may be needed if the labor market continues to soften.
Daly also warned against waiting too long for “complete certainty” before acting, stating that a delay of six months to a year could be too late to effectively respond to economic weaknesses. She suggested that the Fed should be proactive rather than reactive, indicating that every upcoming meeting is a “live meeting” where policy changes are possible based on new data.
August 2025, Crytoniteuae
