Fed's Daly stated that three rate cuts may be needed and warned that latency will harm the labor market.

Mary Daly, the president of the San Francisco Fed, stated that due to a weak labor market and stable inflation, the timing for the Fed to cut interest rates is approaching, and it may require more than the two rate cuts predicted in June. She emphasized that if the policy continues to be cautious, it may miss the best adjustment window and even negatively impact employment. The market currently has a 94.4% expectation for a rate cut in September.

Weak Labor Market Drives Rate Cut Expectations Mary Daly, President of the San Francisco Fed, stated in a recent interview with Reuters that the U.S. labor market continues to weaken, and coupled with stable inflation, the Fed needs to start cutting interest rates as soon as possible. She believes that maintaining the current interest rate levels could lead to a disconnect between monetary policy and the real economic conditions.

Maintaining a wait-and-see approach will harm the job market Daly pointed out that while she supports the decision to keep interest rates unchanged in July, if rate cuts continue to be delayed, it may miss the optimal timing for policy adjustments and could harm the labor market. She specifically mentioned that there are already clear signs of weakness in the job market.

Poor employment data strengthens policy shift According to data from July, the United States added only 73,000 jobs, and the unemployment rate slightly rose to 4.2%. Although the data shows little change, Daly stated that broader employment indicators have shown a persistent weak trend, which further reinforces the necessity for interest rate cuts.

This year may see more than two rate cuts Daly emphasized that the two rate cuts mentioned in the Fed's dot plot in June are still "reasonable," but if the labor market remains weak, more monetary easing may be needed. She is not concerned that the new round of tariffs will bring upward pressure on inflation, believing that there is currently no evidence showing that rising trade prices are impacting the overall economy.

It will be too late to confirm inflation after a six-month delay Regarding the view in the market that some are "waiting for more inflation data," Daly opposes it. She believes that waiting six months to confirm the trend before taking action would miss the policy window and exacerbate harm to the labor market.

It is still undecided whether there will be a rate cut in September, but each meeting will assess Although Daly did not explicitly state that an interest rate cut will definitely happen in September, she indicated that every Federal Reserve meeting from now on must seriously discuss the option of cutting rates and closely monitor the trends in labor and inflation data.

The Fed is weighing policy options Daly emphasized that the Fed is currently in a policy "balancing space" and must find a balance between controlling inflation and maintaining sustainable employment. She called for a prompt adjustment of policies to avoid an imbalanced situation.

Political pressure does not affect judgment, Trump pressures for interest rate cuts It is noteworthy that Daly's statement came after President Trump of the United States continuously publicly demanded that the Fed immediately cut interest rates. Trump also plans to appoint a new Fed governor who supports rate cuts. However, Daly emphasized that her judgment is entirely based on economic data, not political pressure.

Market bets on a high probability of a rate cut in September According to the latest CME FedWatch Tool data, the market currently believes there is a 94.4% probability that the Fed will cut interest rates at the September meeting, lowering the rates from the current range of 4.25% to 4.50% down to 4.00% to 4.25%. Only 5.6% of market participants expect no change.

Conclusion:

The strengthening signal of the Fed's interest rate cuts will have a significant impact on the cryptocurrency market, including Bitcoin. Investors should continuously monitor changes in the labor market and inflation data, as well as the Fed's subsequent policy dynamics, to make timely adjustments.