San Francisco Fed’s Daly says jobs report complicates interest rate call

San Francisco Federal Reserve President Mary Daly said Friday that February’s weak jobs report complicates policymaking.

In an interview with CNBC, Daly made no commitments on interest rates but said a softening labor market and inflation still running above the central bank’s 2% target were complicating future decisions.

“This job market report caught my attention,” he said during the “Squawk Box” interview. “I don’t think you can review this report, but I also think you shouldn’t evaluate more than a month’s worth of data.”

The Bureau of Labor Statistics on Friday reported that nonfarm payrolls fell by 92,000 in February, despite expectations for a 50,000 increase in the past five months and a decline in third-party jobs.

As labor market concerns mount, the Fed cut its benchmark interest rate three times in the second half of 2025 and has taken a more cautious approach since then, with inflation still above target and threatened by the Iran war.

“It’s a very different universe than when inflation was below our target,” Daly said, referring to cuts in 2019 when prices moderated. “But right now there’s inflation pressure above target. It’s been pressing above target for some time, so it’s really a balance-of-risk calculation and hopefully the 75 basis points we did last year creates a floor below the labor market.”

Following the report, futures investors increased their odds of a rate cut, moving the next rate cut to July and increasing the possibility of two cuts by the end of the year.

“I think the point is that it’s really hard to walk right now in a world where we have no evidence of that. [the labor market is] It’s pretty stable. “That’s why I think we need more time,” he said.

Daly won’t be able to vote on the rate-setting Federal Open Market Committee this year, but he will vote again in 2027.