Fed's Daly Confident in Current Economic Policy Stance

San Francisco Federal Reserve Bank President Mary Daly recently shared her views on the current state of the U.S. economy, expressing confidence in the existing monetary policy and acknowledging the need for further work to reduce inflation. Daly recognized the economy's positive positioning and the Fed's efforts in achieving more balanced risks.

Economic Outlook and Monetary Policy

Daly emphasized the significance of a careful approach to monetary policy, advocating for patience and gradual adjustments. She indicates that although rate cuts may be on the horizon, they should not be anticipated to happen immediately. The focus of last year on combating inflation has shifted, with Daly highlighting the increased necessity to pay attention to the Fed's other goal: achieving maximum employment.

Inflation and Interest Rates

Addressing inflation concerns, Daly noted that despite its reduction from the 2022 peak, inflation remains above the desired level. She cited a recent core consumer price inflation figure of 3.9% in December, stating that more effort is required to bring it down to the Fed's target of 2%. Daly’s stance remains cautious, even with other policymakers expressing a more optimistic outlook on inflation.

Fed's Quiet Period Before Policy Meeting

As the Fed enters its quiet period leading up to the January 30-31 policy meeting, Daly's insights provide a final glimpse into the Fed's current thinking. Her remarks offer a balanced perspective on the economy's state and the necessary monetary policy adjustments moving forward.

Fed, Economy, Inflation