Fed's Daly: The job market could suddenly deteriorate, supporting a rate cut in December.
TL;DR
Fed's Daly supports a December rate cut, citing higher risks of a sudden job market deterioration than inflation surge. She believes the labor market is fragile and could change non-linearly, making a cut necessary.
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On November 25, according to the Wall Street Journal, San Francisco Federal Reserve President Mary Daly, a 2027 FOMC voting member, stated that she supports a rate cut next month because she believes the possibility of a sudden deterioration in the job market is greater and more difficult to control than a sudden rise in inflation. In an interview on Monday, she said, "I'm not confident we can stay ahead in the labor market. The labor market is already fragile enough; the risk lies in non-linear changes."
She stated that, by comparison, the risk of an inflationary surge is lower because tariff-driven cost increases have been much more moderate than anticipated earlier this year. Daly's views are worth noting; although she does not have a vote on monetary policy this year, she rarely disagrees with Federal Reserve Chairman Powell in public. At the December 9-10 meeting, Daly is likely to play a key role in resolving the divisions within the interest rate-setting committee regarding whether to cut rates or pause rate hikes. (Jinshi)