Blow to Trump’s hopes as he won't like this: Fed's Daly says rate cut unlikely next

Fed interest rate cut September 2025: US president Donald Trump may not be thrilled with the latest signals from the Federal Reserve. San Francisco Fed President Mary Daly has pushed back on the idea of a steep 50-basis-point interest rate cut at the central bank’s next meeting, according to a report from The Wall Street Journal.

Mary Daly Rules Out Big 50-Basis-Point Cut at September Fed Meeting

Daly said in an interview with WSJ, published on Wednesday, that "Fifty sounds, to me, like we see an urgent — I'm worried it would send off an urgency signal that I don't feel about the strength of the labor market," as quoted in the report. She emphasised that, "I just don't see that. I don't see the need to catch up," as quoted in the WSJ report.

The remark strikes a different tone from what some market watchers and policymakers had begun to expect. Since the Fed’s decision last month to hold rates steady, more Fed officials have expressed concern over the softening labor market and hinted they may be open to cutting rates, perhaps as early as September, according to a Reuters report.


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Fed Official Supports Gradual Policy Shift, Not Rapid Cuts

This comes as the US president has been outspoken all year in his push for lower interest rates, as per the report. However, Daly’s caution may complicate those expectations. While she has acknowledged that inflation pressures haven’t been as persistent and that the job market is cooling, she favors a more gradual approach, according to the Reuters report.

Daly said that "Policy is likely to be too restrictive for where the economy is headed. So for me, that calls for recalibration," as quoted in the report. But she clarified that any shift should move slowly toward a more neutral setting “over the next year or so,” as quoted by the Reuters report.

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Trump Administration Pushes for Fed Rate Cuts

The Fed’s direction remains a very important issue in Washington, especially as US Treasury Secretary Scott Bessent reportedly continues to press for rate cuts, according to the report. Meanwhile, the administration is also exploring potential replacements for Fed Chair Jerome Powell, with a growing shortlist now up to 11 names, as reported by Reuters.

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FAQs

Is the Federal Reserve cutting interest rates in September?
Not necessarily. Fed officials are divided, and Mary Daly has said she doesn’t see an urgent need for a big rate cut right now.

What’s happening with Jerome Powell’s position?
The administration is reportedly considering a replacement, with a list of about 11 potential candidates.