On August 5, San Francisco Federal Reserve Chair Daley stated that with increasing evidence of a weakening job market and no signs of persistent tariff inflation, the timing for interest rate cuts is approaching. Referring to the Fed's decision last week, Daley said, "I'm willing to wait another cycle, but I can't wait forever."
While this does not mean a September rate cut is a done deal, she said, "I would tend to think that every meeting going forward is an immediate meeting to consider policy adjustments." Daley noted that two 25 basis point rate cuts within the year still appears to be an appropriate recalibration, with the key being whether cuts occur in both September and December, rather than if cuts will happen.
Daley said, "If inflation rebounds and spreads, or if the labor market recovers, rate cuts could certainly be fewer than two. However, it is more likely that more than two rate cuts will be necessary. If the labor market appears to be entering a soft phase and we do not see the spillover effects of inflation, we should be prepared to make more rate cuts." (Jinshi)
