Fed Daly: The time to cut interest rates is approaching, and the number of rate cuts during the year is more likely to be greater than two

On August 5th, San Francisco Federal Reserve President Daly said that with the growing evidence that the labor market is weakening and there is no sign that tariff inflation is persisting, the time to cut interest rates is approaching. "I am willing to wait another cycle, but I can't wait forever," Daly said of the Fed's decision last week. While this does not mean that a September rate cut is a foregone conclusion, she said: "I would like to think that every meeting going forward is an instant meeting to think about policy adjustments." Daly said that two 25 basis point rate cuts during the year still look like an appropriate readjustment, and it is whether to cut rates in both September and December that matters, not whether a rate cut will happen. "If inflation picks up and spreads, or if the labor market picks up, of course there can be fewer than two rate cuts, but it's more likely that more than two rate cuts will have to be made," Mr. Daly said. "If the labor market looks to be entering a period of weakness and we don't see inflation spillovers, be prepared for more rate cuts."