Fed’s Daly raises alarm over “real weakness” in slowing labor market

San Francisco Fed President Mary Daly commented in a forum overnight, stating that “we’ve now confirmed that the labor market is slowing”. She emphasized the importance of ensuring that this slowdown does not turn into a downturn.

However, she expressed her concern that “it’s too early to tell” whether the labor market is “slowing to a sustainable pace which allows the economy to continue to grow” or if it is approaching a point of “real weakness.”

Daly also mentioned that she expects interest rates to eventually come down “to preserve the balance” of full employment and price stability. However, she cautioned that she is not prepared to specify when or by how much, as she plans to review more data before the next Fed policy meeting in September.