In a Wall Street Journal interview, Fed’s Daly supports a 25 basis point rate cut in December.

• Daly says she supports cutting rates at the December meeting due to rising risks of a sudden labor-market deterioration.

• Warns the job market is “vulnerable” and could have a nonlinear downturn, which she sees as harder to manage than an inflation flare-up.

• Says tariff-related inflation pressures have been more muted than expected, reducing the risk of an inflation breakout.

• Daly rarely diverges from Powell publicly, making her stance notable as the committee remains divided.

• Still believes the Fed can return inflation to 2% without higher unemployment—and that failing to do so would be a policy failure.

• Notes the economy has been in a “low-hiring, low-firing” equilibrium, but warns it is fragile and could break negatively if layoffs rise or output slows.

Based on recent comments, 3 of 7 Fed governors are leaning toward a cut. 3 are unclear while 1 is favoring a pause. Of the voting Presidents, 1 is in favor of a cut (near Fed Pres. Williams), while 4 are favoring a pause. That would imply 4 voting for a cut and 5 voting for a pause with 3 voting members unclear including the Fed chair Powell.

The market is pricing in a 19 basis points of easing/76% chance of a cut.

Board of Governors (all vote):

• Powell: Unclear

• Jefferson: Unclear

• Bowman: Cut

• Barr: Pause

• Cook: Unclear

• Miran: Cut

• Waller: Cut

Voting Reserve Bank Presidents:

• Williams (NY): Cut

• Collins (Boston): Pause

• Goolsbee (Chicago): Pause

• Musalem (St. Louis): Pause

• Schmid (Kansas City): Pause

Looking at the nonvoting presidents, Feds Hammack is the most hawkish. There are 4 who are in favor of a pause while 2 are in favor of cutting. Fed’s Barkin is unsure.

• Hammack (Cleveland): Pause

• Kashkari (Minneapolis): Pause

• Logan (Dallas): Pause

• Paulson (Philadelphia): Cut

• Daly (San Francisco): Cut

• Bostic (Atlanta): Pause

• Barkin (Richmond): Unclear