The Federal Reserve's Daley said that the labor market is fully balanced and the time has come to adjust policy; it is difficult to imagine what factors will interfere with the September rate cut; as inflation falls back, it is not expected to tighten policy further; there are no signs of sudden weakness in the labor market, no signs of companies preparing to lay off workers; it is too early to judge the extent of interest rate cuts; interest rates move downward. Daley said that with the inflation-adjusted neutral rate as high as 1 percent, the Federal Reserve must reduce inflation to its 2 percent target.