San Francisco Federal Reserve President Mary Daly said the latest, weaker-than-expected U.S. jobs report increases her concern about labor market conditions, but she argued it should not automatically trigger an immediate cut to policy rates.
Asked about the appropriate policy response, Daly noted the Fed faces "two-sided" risks: inflation that remains too high and an uptick in oil prices amid the Iran conflict. Those factors, she said, argue for caution before altering short-term borrowing costs.
"There’s another alternative which is also a policy alternative, which is to hold them steady while we collect more information," Daly told CNBC, referring to short-term borrowing costs that the Fed cut last year but held steady in January. She added: "I’m certainly not in a position to think we should be hiking interest rates, but I think there’s a real issue about whether we should meet immediately, urgently act on the labor market, or whether we should wait to think through the data."
Daly’s remarks stressed a data-dependent approach: the labor report has raised caution, yet the broader inflation picture and recent movements in oil prices mean policy makers face competing considerations. The option to maintain the current stance while awaiting clearer signals was presented as a viable policy path alongside other choices.
The comments reiterated that, despite signs of softening in employment, the Fed is not positioned to move toward tightening. At the same time, Daly signaled that impulsive easing in response to a single labor release would be premature given the persistence of inflationary pressures and geopolitical influences on energy markets.
Her view frames the Fed’s near-term challenge as balancing the evidence from the labor market against broader price pressures and supply-side shocks to energy costs. That balancing act, Daly said, argues for measured deliberation rather than immediate policy shifts.
Summary
Mary Daly said a weak jobs print reinforces concern about labor market vulnerability but does not compel an immediate rate cut. She emphasized the Fed faces two-sided risks from still-too-high inflation and a rise in oil prices linked to the Iran conflict, and she advocated holding rates steady while collecting more data.