The Federal Reserve's Daly: The timing for interest rate cuts is approaching, and there may be more than two this year (with the probability for September nearing 95%)

Mary Daly, President of the San Francisco Federal Reserve Bank, warned that the job market is weakening, and interest rate cuts have become a real option for the Federal Reserve in its upcoming meetings, with the market betting on a rise in the likelihood of action in September. (Background: False prosperity! U.S. July non-farm employment far below expectations, with May and June revised down by 258,000 jobs; Trump criticizes Powell and fires the Labor Secretary) (Context: Taiwan's 20% tariffs lead to the New Taiwan Dollar depreciating beyond 30, creating a two-month low; semiconductor tariffs next week could be a major issue) Could interest rate cuts come sooner than expected? On Monday (4th), the usually cautious President Mary Daly pointed out to the media that the U.S. labor market is weakening, and the price pressures from tariffs have not yet continued to spread, suggesting that the Federal Reserve is just a step away from cutting rates. The signals for rate cuts are becoming increasingly clear. Daly stated that the decision to maintain the interest rate range at 5.25% to 5.50% last week means there can no longer be a long-term wait for action. She reminded, "Every meeting from now on is a live meeting," and that rate cuts will depend on data. When pressed by reporters, she candidly said: I am willing to wait another cycle, but I cannot wait forever. In the June dot plot, most decision-makers anticipated two rate cuts this year, each by 0.25 percentage points. Daly reiterated that this path "is still well calibrated," but also added that the real key is not whether to act in September or December, but "whether" to act. At the same time, she noted that if the pace of labor market weakness accelerates, the number of rate cuts could exceed two. According to Fedwatch data, the probability of the Federal Reserve cutting rates by one basis point in September is as high as 94.4%. The labor market is slowing down. Daly's change in attitude is primarily due to the latest non-farm report released last Friday, which showed that only 73,000 jobs were added in July, far below the average level of the previous three years, and the unemployment rate slightly rose to 4.2%. Even more concerning for the market is that the employment increases in May and June were both significantly revised down, indicating that the cooling labor demand is no longer a one-off event. She pointed out that if action is only taken after the labor market weakens comprehensively, it would take six months to a year for policy transmission, by which time the damage to the labor market may already be irreversible. We know that stabilizing prices and maintaining full employment are the Federal Reserve's most important dual tasks, and at this stage, the focus may lean towards protecting the labor market. Inflation pressure has temporarily eased. As for the market's original concern that a new round of tariffs would push up inflation, Daly believes that the related impact is still "one-off" and limited in scope. She mentioned that companies are largely sharing import costs through the supply chain, and the service sector has seen housing and some service prices soften, with overall price momentum not out of control. Policy paths and market pricing Before the September Fed meeting, two non-farm reports and several inflation indicators will be released, which will influence the terminal interest rate level and the pace of rate cuts. If employment continues to slow while inflation steadily approaches the 2% target, the Federal Reserve may raise the number of rate cuts this year from two to three. Conversely, if prices rise again, decision-makers also reserve the space to pause actions. Under the dual backdrop of a weakening labor market and no worsening inflation, rate cuts seem to be a foregone conclusion. When exactly the Federal Reserve will pull the trigger will determine whether the U.S. economy can achieve a soft landing and will also affect the reshaping of the global investment landscape. Related reports: Trump angrily fires the Labor Statistics Director! When "truth" becomes a toy for presidential power, the U.S. economy is plunging into a blind storm. The U.S. deploys nuclear submarines to threaten Russia! Trump: Medvedev's remarks are too provocative; I just want to stop the Russia-Ukraine war. Trump revealed he considered "splitting Nvidia" but found that Nvidia is simply too strong, and Jen-Hsun Huang responded with compliments. This article was first published in BlockTempo, the most influential blockchain news media.