San Francisco Federal Reserve President Mary Daly on Monday said she expects that interest rates will be cut later this year but declined to provide a timetable or the extent to which the central bank will ease.

With markets expecting aggressive reductions starting in September, Daly said progress on inflation and a clear slowdown in hiring likely will drive the Fed to some extent of policy easing.

"Policy adjustments will be necessary in the coming quarter. 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," she said during a forum in Hawaii. "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."

The remarks come the same day Wall Street suffered its worst drawdown in nearly two years as investors wrestled with fears over slowing growth and the Fed's response. At their meeting last week, Fed officials provided some hints that lower rates are coming but were short on specifics.

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

A voter this year on the rate-setting Federal Open Market Committee, Daly vowed that policymakers will do what is necessary to achieve their economic objectives.

"We will do what it takes to ensure what we achieve both of our goals, price stability and full employment," she said. "We will make policy adjustments as the economy delivers the data and we know what is required."

Earlier in the day, Chicago Fed President Austan Goolsbee told CNBC that the central bank's "restrictive" rates policy doesn't make sense if the economy isn't overheating, which he said it is not. If there are trouble signs with the economy, Goolsbee said the Fed will "fix it."