The Fed’s Daly (non-voting member): We are closer to our destination

San Francisco Fed Pres. Mary Daly is a speaking (nonvoting member):

  • We stood at this week on rates in recognition that we are closer to our destination.
  • We are holding rates steady to collect information to see if more is necessary.
  • Holding rates this week doesn’t predict what we will do next.
  • We need to go at a slower pace.
  • We’ve had a good set of data in last few months, inflation is coming down.
  • Labor market is gradually adjusting.
  • Unequivocally good news that inflation is coming down, and labor market adjusting gradually.
  • I’m not ready to declare victory.
  • We will not be satisfied until we are confident inflation is on a path back to stability.
  • We want to bring inflation to 2% as gently as we can.
  • We do not know if we need to hold rates here or do more.
  • Patience is a prudent strategy.
  • US economy has a lot of momentum
  • Labor market is still not in balance, but it is slowing and is a good sign for the economy.
  • Part of improvement on inflation has come from supply-side.
  • Demand is also slowing, creating opportunity for the terrific relief of inflation to come down
  • Banks are tightening credit, but that’s what we want banks to do to get drop in inflation that we need
  • The banking system is safe
  • Generative AR is small right now in the scheme of things
  • Generative AI could improve productivity, could also be disruptive, still early to know
  • Committed to bring inflation down.
  • Watching the rising energy prices, it’s a hardship for families.
  • Also watching the sticky nonhousing services inflation.
  • It is unlikely that we will be at 2% inflation in 2024
  • I am completely unwilling to entertain an increase of 2% inflation target
  • Should not rule out risks, but the economy is proving the risk of stagflation to be less important.
  • Even if there is a government shutdown we are prepared to continue to do or work and achieve our goals
  • We are seeing firms’ expected wage growth moderating
  • We will be watching if energy price increases push up short run inflation expectations.
  • Right now I have no indication that inflation expectations are rising.
  • Credit card debt, delinquencies are starting to rise, but still at very low levels relative to the past.

Fed’s Daly is not a voting member. Her comments are positive for inflation and for soft landing, but she at the same time hedges herself.

This article was written by Greg Michalowski at Source