San Francisco Fed President Mary Daly said in a Bloomberg TV interview that “the time is upon us” to cut interest rates, strongly suggesting that a rate reduction in September is highly likely.

Daly expressed concerns about maintaining “highly restrictive into a slowing economy”, and stated that it is “hard to imagine” not easing rates soon.

Daly outlined her most probable outlook, which involves inflation gradually slowing and the labor market continuing to add jobs at a “steady, sustainable” pace. If this scenario holds, she noted, adjusting policy at a “regular, normal cadence” would be reasonable.

However, Daly also indicated that if the labor market shows any signs of deterioration or weakness, “being more aggressive” in policy adjustments would be appropriate to avoid further economic strain.

In his highly anticipated Jackson Hole speech, Fed Chair Jerome Powell made it clear that “the time has come” for a shift towards monetary easing. Although he did not specify the exact timing or pace of rate cuts, Powell highlighted the increasing need to support the labor market, indicating that Fed is ready to respond to “further weakening” in labor conditions.

Powell noted that the “upside risks to inflation have diminished,” while the “downside risks to employment have increased.” This marks a notable change in focus, with the Fed Chair emphasizing that the path forward will be determined by “incoming data,” the evolving economic outlook, and the balance of risks.

He reassured markets of Fed’s commitment to maintaining employment, asserting that the central bank will do “everything we can to support a strong labor market.” Powell expressed confidence that with a cautious reduction in policy restraint, the economy could return to the 2% inflation target without jeopardizing employment.

Powell also underscored the flexibility that the current policy rate offers, pointing out that it provides “ample room” to address any potential risks, including the possibility of further deterioration in labor market conditions.

Full speech of Fed’s Powell here.

Philadelphia Fed President Patrick Harker and Boston Fed President Susan Collins have both indicated their support for beginning a gradual reduction in interest rates, assuming no unexpected changes in economic data.

Harker emphasized that the process should start soon, stating, “barring any surprise in the data we’ll get between now and then, I think we need to start this process.” He also noted that the pace of rate cuts should be “slow and methodical.”

Collins echoed this sentiment, highlighting the progress made in reducing inflation. She remarked, “We’ve seen quite a lot of reduction in inflation,” and expressed confidence that the economy is on the right path.

Collins also underscored the importance of a “gradual, methodical pace” in the rate-cutting process to maintain the health of the labor market.

In a Bloomberg TV interview recorded on Wednesday and aired Thursday, Kansas City Fed Bank President Jeff Schmid emphasized the importance of waiting for additional economic data before making any decisions on rate cuts.

“It makes sense for me to really look at some of the data that comes in the next few weeks,” Schmid stated.“ Before we act — at least before I act, or recommend acting — I think we need to see a little bit more.”

Schmid also downplayed concerns arising from a recent Bureau of Labor Statistics report that suggested payroll growth over the past year may have been overstated by 818k jobs.

Despite the significance of the number, Schmid remarked, “While it’s a big number, it doesn’t really change the path of the way I think of things when I think about monetary policy.”