San Francisco Fed President Daly: Employment data insufficient to trigger rate cuts, decision-making still needs to be cautious under inflation and oil price risks.

San Francisco Fed President Daly said that the latest US employment report, which was weaker than expected, did raise concerns for her about the labor market conditions, but this does not mean that the Fed needs to immediately respond by cutting interest rates. With current inflation still above target and the conflict with Iran pushing up oil prices, monetary policy is facing "two-way risks", and decisions need to remain cautious. Daly said in an interview on Friday that the Fed had already cut rates last year, and one policy option now is to continue to keep rates unchanged to gather more economic data before making a judgment. She said, "We have another policy choice, which is to maintain rates stable while gathering more information." Daly pointed out that the latest employment data did catch her attention and may indicate a weaker labor market than previously expected. If the number of new jobs needed to maintain a "balance sheet" stability is around 30,000, then the latest data has fallen below this level. However, she emphasized that policy decisions cannot be made based on just one month of data. She said that the Fed cannot ignore this employment report but also cannot adjust policy based solely on one piece of data. Factors such as strikes, extreme weather, and population base revisions may affect data interpretation, so more time and additional data are needed to confirm trends. In terms of inflation, Daly said that the US inflation rate is still above the Fed's 2% target, and recent rises in oil prices due to tensions in the Middle East may also bring new inflationary pressures. If energy prices continue to rise, consumers will directly feel cost pressures. At the same time, she believes that current wage growth does not show signs of overheating. Ideally, wage growth should roughly equal the inflation rate plus the rate of productivity growth, and there are signs of improvement in productivity in recent times. In terms of policy prospects, Daly emphasized that the key to current decision-making is to balance risks. While there are signs of a slowdown in the labor market, inflation has not fully fallen back, and the uncertainty brought about by rising oil prices means that the policy path faces "two-way risks". Therefore, the Fed needs to maintain stability and should not act hastily before obtaining more data. Daly also stated that there is currently no evidence that the US economy is overheating. She holds a certain optimistic attitude towards the possibility of artificial intelligence boosting productivity, but believes that the related impacts still need to be observed over time.