San Francisco Fed President Mary Daly Signals Rate Cut Imminent, Stronger Cut Possible
In a recent interview with Bloomberg, San Francisco Fed President Mary Daly reiterated expectations for a rate cut next month and hinted at the possibility of a larger cut if the labor market continues to deteriorate. With Fed Chairman Jerome Powell also signaling a shift in policy towards rate cuts at the recent Jackson Hole conference, all signs point to a rate cut in September.
While a 25 basis point cut is the most likely scenario, Daly's comments suggest that a more aggressive cut could be on the table if the labor market weakens further. This marks a significant change in the Fed's focus, as just a few weeks ago Daly had described the labor market as slowing but not weak.
Investors will be closely watching the upcoming jobs report on Sept. 6, as it will precede the Federal Open Market Committee meeting on Sept. 17-18. Any signs of weakness in the labor market could prompt a stronger response from the Fed.
In conclusion, investors should be prepared for a rate cut in September, with the potential for a larger cut if the labor market shows signs of further deterioration. Keeping a close eye on economic indicators and Fed statements will be crucial in navigating the evolving market conditions.