NextFin news, San Francisco Federal Reserve Bank President Mary Daly spoke on Wednesday, September 24, 2025, emphasizing that the U.S. labor market is sustainable and not weak despite a recent slowdown. She expressed full support for the Federal Reserve's recent quarter-point interest rate cut but warned that lowering rates to neutral has limited effects on economic stability.
Daly highlighted that while the labor market has cooled from its previous rapid pace, it remains resilient and sustainable. She cautioned against further weakening, noting that once the labor market deteriorates, recovery becomes difficult. She described the recent rate cut as an insurance measure to protect the labor market.
Regarding inflation, Daly noted that it has risen less than expected and that inflation excluding tariffs is roughly between 2.4% and 2.5%. She acknowledged that tariffs have had a one-time impact on inflation but stressed that more work is needed to restore price stability.
On monetary policy, Daly indicated that further adjustments are likely necessary as the Fed continues to balance restoring price stability with supporting the labor market. She stated that the Fed's rate-path projections are not promises and that decisions will be made by assessing tradeoffs at each point.
Daly also addressed recession risks, stating they are very low at present. She noted that while the recent interest rate cut will provide some relief to the housing market, it will not solve underlying supply issues affecting affordability.
She emphasized that the current economic situation is not stagflation and that the economy still requires monetary restraint, but not as aggressively as before. Daly concluded by underscoring the complexity of the economic environment and the limits of interest rate policy in addressing broader policy challenges.
These remarks were reported by FXStreet and Investing.com based on Daly's public statements on September 24, 2025.
Explore more exclusive insights at nextfin.ai.
