(Reuters) - San Francisco Federal Reserve Bank President Mary Daly said Monday that cuts to the U.S. central bank's benchmark rate are likely be appropriate next year because of an improvement in inflation this year, the Wall Street Journal reported.

The Fed must make sure "we don't give people price stability but take away jobs," Daly told the Journal in an interview. The Fed aims to bring inflation down to its 2% goal, she said, but wants to "continue to do this gently, with as few disruptions to the labor market as possible."

Daly said her outlook for interest rates and inflation was similar to the median of projections from all 19 Fed policymakers released last week, which showed a majority are penciling in a 75 basis-point reduction from the current 5.25%-5.50% target range for the policy rate, with inflation falling to about 2.4% by year end.

The unemployment rate at 3.7% is only a few tenths above the level it was when the Fed began raising interest rates from near zero in March 2022. Daly said that when the unemployment rate rises it often goes up in large chunks, and that's a situation she'd like to avoid.

With inflation on a downward path, holding rates steady would increase the real borrowing costs felt by households and businesses, increase the possibility "that we could overtighten quite easily, and so that's what I'm mindful of," Daly told the Journal.

Even with a 75 basis-point reduction in the benchmark rate next year, she told the Journal, monetary policy will still be "quite restrictive."

(Reporting by Juby Babu in Bengaluru; Editing by Leslie Adler and Deepa Babington)