San Francisco Fed President: Employment is more concerning than inflation, and a rate cut in December should be on the agenda.

The president of the San Francisco Fed, Daly, recently sent a signal - she is more worried about a sudden collapse in the job market than a Rebound in inflation.

During a communication on November 25, she bluntly stated: the labor market is now quite weak, and the real risk lies in the possibility of nonlinear drastic changes. “I can't be sure I can respond in advance when it comes to employment.” This sounds a bit precarious, but combined with her strong support for a rate cut next month, the logic is coherent—rather than betting that inflation will spiral out of control, it's better to provide a safety net for the labor market first.

Her judgment is based on an observation: the cost pressures driven by tariffs are actually much milder than predicted at the beginning of the year, and the probability of a sudden inflation outbreak is not high. In contrast, once employment data turns around, the chain reaction will be much harder to manage.

It is worth noting that although Daly does not have voting rights this year, she rarely goes public with dissenting opinions. Now she has clearly aligned herself with rate cuts, which may influence those committee members who are still hesitant about whether to pause interest rate hikes during the meeting on December 9-10. After all, the market is waiting to see how Powell will express himself next.