San Francisco Fed President Mary Daly said Friday that the weak February jobs report makes the policy-making environment even more difficult.
In an interview with CNBC, Daly declined to state his position on interest rates, but said future decisions would be complicated by a weakening labor market and inflation still above the central bank’s 2% target.
“This job market report caught my attention,” she said in an interview on “Squawk Box.” “I don’t think you can look through this report, but I also don’t think you should leverage more than one month of data.”
On Friday, the Bureau of Labor Statistics reported that nonfarm payrolls fell by 92,000 jobs in February, contrary to expectations for an increase of 50,000 jobs, marking the third decline in employment in the past five months.
Amid mounting labor market concerns, the Fed has cut its benchmark interest rate three times in late 2025, taking a more cautious approach as inflation remains above target and under threat of war with Iran.
“It’s a very different world than when inflation is below target,” Daly said, referring to the 2019 interest rate cuts when prices were subdued. “But now inflation is above target. It’s been above target for some time, so it’s really a balance of risk calculation and we hope that the 75 basis points that we did last year will put a floor in the labor market.”
The report prompted futures traders to raise the probability of a rate cut, pushing the next rate cut forward to July and raising the possibility of two rate cuts before the end of the year.
“I think the important thing is that it’s very difficult to raise rates at this point in a world where there’s no evidence that[the labor market]is completely stable. So I think we need more time,” she said.
Daley does not have a vote this year on the Federal Open Market Committee, which sets interest rates, but plans to vote again in 2027.
