San Francisco Federal Reserve President Mary Daly expects a cut to interest rates at some point this year.

"Policy adjustments will be necessary in the coming quarter,” she said during a forum in Hawaii. “How much that needs to be done and when it needs to take place, I think that's going to depend a lot on the incoming information.”

Declining inflation will probably prompt the Fed to cut rates, as markets expect significant cuts when it meets on Sept. 18 and beyond, CNBC reported.

"But from my mind, we've now confirmed that the labor market is slowing and it's extremely important that we not let it slow so much that it turns itself into a downturn,” Saly added.

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Daly made these comments after the Fed said it was keeping rates unchanged at its July 31 meeting. The U.S. jobs report for July showed unemployment rising to 4.3% on Friday.

Wall Street saw its biggest fall in nearly two years on Monday as investors worried about a slowing U.S. economy and the Fed’s decision to keep rates the same.

In the following two days, consecutive weak reports on layoffs, manufacturing and job creation generated a scare that the Fed is moving too slowly.

Daly, who holds a seat on the Federal Open Market Committee, said the Fed will ensure that it carries out its dual mandate of stable prices and full employment.

Chicago Fed President Austan Goolsbee told CNBC on Monday that the Fed’s “restrictive rates” policy does not make sense.

The economy is not overheating, Goolsbee said.

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