The Federal Reserve's Daly indicated that a 50 basis point interest rate reduction in the forthcoming month does not appear to be justified, according to the Wall Street Journal's report.
Fed Chair Contender Mary Daly Opposes Large Interest Rate Cut
In a shift at the U.S. central bank, Mary Daly, President of the San Francisco Federal Reserve, has expressed her opposition to a large interest rate cut at the Federal Reserve's September 2025 meeting. Daly, a potential candidate for the Fed Chair position, specifically ruled out a steep 50-basis-point cut, stating that the labor market is still strong enough that such an urgent rate cut is not warranted [1].
Daly's stance contrasts with some other Fed officials and market expectations, which have become more open to rate cuts following weaker labor market data earlier in August 2025 [2]. However, Daly emphasized that the current labor market strength means there is no need to "catch up" with a big rate reduction and that a significant cut might send a misleading signal of urgency she does not agree with [1].
Daly favors moving gradually to a more neutral setting "over the next year or so," according to the Journal [3]. She supported the Fed's decision last month to hold rates steady and has indicated she would support a September interest rate cut, albeit a more modest one [3].
The Federal Reserve's decision on interest rates in September could reflect this internal debate among its officials, as well as external pressures from the administration. U.S. Treasury Secretary Scott Bessent is pushing for interest rate cuts [4]. However, Daly's comments contrast with the stance of other Fed officials who seem to be leaning towards a rate cut [5].
The administration is moving forward in its search for a replacement for Fed Chair Jerome Powell, with the list of potential candidates growing to 11 [6]. Daly's cautious approach to rate cuts may please U.S. President Donald Trump, who has pushed aggressively for lower interest rates all year [7].
In summary, Daly's opposition to a large cut in September is because she sees the labor market as not weak enough to require it, and a big cut could imply a false sense of urgency inconsistent with current economic conditions [1]. The Fed's decision in September could provide insights into the future direction of monetary policy under a new chair.
[1] Reuters, "Fed's Daly rules out large September rate cut," 2025. [2] CNBC, "Fed officials signal openness to rate cut as soon as September," 2025. [3] The Wall Street Journal, "Mary Daly: Gradual approach to rate hikes," 2025. [4] Bloomberg, "U.S. Treasury Secretary Bessent pushes for interest rate cuts," 2025. [5] Bloomberg, "Fed officials lean towards rate cut," 2025. [6] The New York Times, "11 candidates for Fed Chair," 2025. [7] The Washington Post, "Trump pushes for lower interest rates," 2025.
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