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Fed Policymakers Warn of Potential Rate Cut Amid Softening Labor Market
6 Aug
Summary
- Fed officials express concerns over weakening US job market
- Potential interest rate cuts in coming months to address labor market issues
- Revisions to recent job data point to economic slowdown
As of August 7th, 2025, three Federal Reserve policymakers have expressed concerns about the state of the US labor market, hinting at the possibility of an interest rate cut in the near future.
Federal Reserve Bank of San Francisco President Mary Daly stated that policymakers will likely need to adjust interest rates in "coming months" to prevent a further deterioration in hiring. She noted that the labor market has already "softened" and that additional slowing would be "unwelcome."
Echoing these sentiments, Fed Governor Lisa Cook commented on the recent July jobs report, which included significant downward revisions to data covering the last three months. Cook described the revisions as "somewhat typical of turning points" in the economy, suggesting a broader slowdown.
Neel Kashkari, president of the Minneapolis Fed, also voiced worry over the slowdown evident in multiple data points. He said that "the economy is slowing" and that "in the near term it may become appropriate to start adjusting the federal funds rate."
Kashkari added that he still expects the Fed to lower rates twice before the end of 2025, underscoring the central bank's potential shift in monetary policy to address the weakening labor market conditions.
