San Francisco Fed President Mary Daly stated on Friday that one or two additional interest rate cuts may be necessary, citing vulnerabilities in the labor market. Daly expressed support for the Federal Reserve's recent decision to maintain the federal funds rate target range at 3.50%-3.75%. However, she noted in an interview, "I believe there is a rationale for continued action and further rate reductions." Daly emphasized that lowering borrowing costs requires "strong confidence that tariff impacts will fade... and that inflation is indeed on a downward trajectory." She added that policymakers must also "genuinely worry that labor market challenges are more severe than currently reflected in the data." Overall, she views risks between price stability and maximum employment as "relatively balanced," though vulnerabilities are tilting toward the employment side of the Fed's dual mandate. Daly warned that if businesses experience weak demand, the current slowdown in hiring could quickly turn into widespread layoffs. Unlike some colleagues, Daly noted, "I'm slightly more concerned about the labor market than inflation." She also highlighted a key labor market indicator: numerous parents have reported their children facing difficulties finding jobs. This trend is reflected in recent data showing higher unemployment rates among new college graduates compared to the general workforce. "This is an indicator of labor market 'instability,'" she remarked. "Given what I observe in the economy, I currently lean toward additional rate cuts—whether one or two remains uncertain." The San Francisco Fed president does not hold a voting seat on the rate-setting Federal Open Market Committee this year.