Fed's Daly: The labor market is slowing down, tariffs only have a short-term impact, and the Fed will soon cut interest rates.

[Fed's Daly: Labor market is slowing, tariffs only have short-term effects, Fed will soon lower interest rates] San Francisco Fed President Daly said on Wednesday that considering the slowing labor market and her assessment that tariffs only pose a short-term threat to inflation, she believes the Fed will need to lower interest rates soon. "Inflation has been gradually declining without tariffs, and as the economy slows down and monetary policy remains restrictive, inflation should continue to decline," she added. Although tariffs will push inflation up in the short term, their impact is unlikely to last. Meanwhile, the labor market has already weakened. "I think further slowing will be concerning; once the labor market starts to wobble, it tends to decline quickly and severely. All of this means we are likely to need to adjust our policy in the coming months."