San Francisco Fed President Mary Daly Signals Rate Cut, Potential for Bigger Cut Ahead
In a recent interview on Bloomberg, San Francisco Fed President Mary Daly reinforced expectations for a rate cut next month and hinted at the possibility of a larger rate cut if the labor market weakens further. This comes after Fed Chairman Jerome Powell's message at Jackson Hole, Wyo., where he indicated that "the time has come to adjust policy," signaling upcoming rate cuts.
While a 25 basis point rate cut in September is the most likely outcome, Daly's comments suggest that a more significant cut may be on the table if the labor market deteriorates. She stated, "If labor market weakens more than anticipated, we would need to be more aggressive."
This shift in focus towards labor market weakness marks a change from previous statements made by Daly, where she mentioned that the labor market was slowing but not weak. The upcoming jobs report on Sept. 6 will be closely watched as it precedes the Federal Open Market Committee meeting on Sept. 17-18.
Analysis:
San Francisco Fed President Mary Daly's comments indicate a strong possibility of a rate cut next month, with potential for a larger cut if the labor market worsens. This could have significant implications for financial markets and individuals, as lower interest rates typically stimulate economic growth but may also signal concerns about the health of the economy. Investors should closely monitor upcoming economic data and Fed announcements to assess the impact on their portfolios and financial decisions.