Fed President Daly: Weak Jobs Data Complicates Rate Cut Path

San Francisco Federal Reserve President Mary Daly stated that the weak February jobs report complicates future interest rate decisions amidst conflicting economic signals. The Bureau of Labor Statistics reported nonfarm payrolls declined by 92,000, marking the third decrease in five months against expectations for a gain. Daly emphasized balancing risks between persistent inflation above the 2% target and a softening labor market following recent rate cuts in late 2025. Following her comments, futures traders increased the probability of rate cuts by July and anticipated two reductions by the end of the year. Daly noted that the current economic environment differs from previous periods due to external threats like the Iran war.

President Mary Daly of the San Francisco Federal Reserve highlighted the challenges posed by recent economic data regarding future interest rate decisions.

Economic Data and Market Expectations

The Bureau of Labor Statistics reported nonfarm payrolls declined by 92,000 in February.
This marks the third decrease in five months against expectations for a gain of 50,000.
Futures traders increased the probability of rate cuts by July and anticipate two reductions by year-end.

Daly's Assessment of Risks

Daly emphasized balancing risks between persistent inflation above the 2% target and a softening labor market.
She noted that hiking rates is difficult without evidence of a steady labor market.
The current environment differs from previous periods due to external threats like the Iran war.

FOMC Voting Status

Daly does not get a vote this year on the rate-setting Federal Open Market Committee.
She will vote again in 2027.