Three Federal Reserve officials issue warnings: The labor market remains weak, and expectations for a rate cut in September are rising
Three Federal Reserve officials expressed concerns about the weakness in the U.S. labor market, suggesting a possible interest rate cut in September. Data showed that 73,000 new non-farm jobs were added in July, far below expectations. San Francisco Federal Reserve Bank President Mary Daly pointed out that if the labor market deteriorates further, adjustments to interest rates may be needed to balance economic risks. Federal Reserve Governor Christopher Waller mentioned significant revisions to employment data, which could indicate a turning point in the economic cycle. Neel Kashkari believes that the economic slowdown warrants an adjustment to the federal funds rate in the short term. The market is focused on whether the September meeting will initiate a rate-cutting cycle
According to the Zhitong Finance APP, three Federal Reserve policymakers expressed concerns about the ongoing weakness in the U.S. labor market on Wednesday and hinted that a rate cut may be initiated at the September meeting. Data shows that only 73,000 non-farm jobs were added in the U.S. in July, far below market expectations.
Mary Daly, President of the San Francisco Federal Reserve Bank, pointed out at an event in Anchorage, Alaska, that the current labor market has shown signs of weakness, and if it further deteriorates, there will be a demand for policy adjustments. She emphasized, "All data indicate that adjustments to interest rates may be needed in the coming months to balance economic risks." Notably, Daly mentioned earlier this week that two rate cuts this year could be a reasonable choice, but the specific number may need to be adjusted based on changes in economic data.
Federal Reserve Governor Lisa Cook specifically noted while analyzing the July employment report in Boston that the cumulative adjustment of employment data over the past three months has been nearly 260,000 jobs (with only 73,000 jobs added in July), and such a significant revision is often a typical characteristic of turning points in the economic cycle.
Neel Kashkari, President of the Minneapolis Federal Reserve Bank, stated more directly in an interview: "The economy is slowing down, and it is appropriate to initiate adjustments to the federal funds rate in the short term." He maintained his previous forecast, believing that two rate cuts will be implemented before the end of 2025.
The latest labor market data shows that the unemployment rate rose slightly from 4.1% in June to 4.2% in July, with significant slowing in employment growth. San Francisco Federal Reserve Bank President Daly emphasized that the current policy focus needs to strike a balance between controlling inflation and stabilizing employment. Although achieving the 2% inflation target remains challenging, short-term factors such as tariffs are unlikely to change the direction of monetary policy.
According to the schedule of the Federal Reserve's interest rate meetings, policymakers will hold the next meeting in September, with two more meetings scheduled for 2025. The market is generally focused on whether this meeting will initiate a rate cut cycle to address the pressures of economic slowdown
