Fed Daly: Job market could suddenly deteriorate, supports rate cut in December

According to the Wall Street Journal, Daley, the president of the San Francisco Federal Reserve and a member of the 2027 FOMC voting committee, said she supports a rate cut next month because she believes the possibility of a sudden deterioration in the labor market is greater and more difficult to control than a sudden rise in inflation. "In the labor market, I have no confidence that we can get ahead of the curve," she said in an interview on Monday. "Right now the labor market is fragile enough that the risk is of non-linear change." She said the risk of an inflationary flare-up is lower in comparison because tariff-driven cost increases are much more modest than expected earlier this year. Daley's views are worth watching, and although she has no vote on monetary policy this year, she has rarely disagreed with Federal Reserve Chair Jerome Powell in public. At the Dec. 9-10 meeting, Daly is likely to play a key role in resolving disagreements within the rate-setting committee over whether to cut rates or pause them.