Fed’s Daly
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.