Fed's Mary Daly: Policy is Set for Any Economic Outcome
Julia DanielsSan Francisco Fed's Daly asserts current policy flexibility amidst economic uncertainty, urging broader input.
San Francisco Federal Reserve President Mary Daly stated on Thursday that the central bank's monetary policy is currently positioned to adapt to any future economic developments.
In a public post, Daly affirmed that the Fed’s policy is "in a good place to respond to however the economy evolves," providing a flexible foundation for navigating the path ahead.
A Look Back at Recent Fed Actions
Daly noted that the Federal Open Market Committee (FOMC) had previously cut its policy rate by 75 basis points last year. This move was a direct response to two key factors: a significant slowdown in the labor market and inflationary pressures that were milder than anticipated.
Promising Data Tempered by Uncertainty
Looking at the current landscape, Daly described incoming economic data as "promising." She pointed to several positive indicators:
• Solid projections for economic growth
• A stabilizing labor market
• Inflation expected to improve through 2026
Despite this optimistic outlook, she stressed that significant uncertainty remains. Daly highlighted that risks persist for both sides of the Fed's dual mandate—maintaining price stability and achieving full employment. This means the central bank must remain "deliberate" as it calibrates policy to meet both objectives.
A Broader Approach to Future Decisions
According to Daly, future policy decisions will require more than just a narrow focus on individual data releases. She emphasized the importance of gathering direct input from businesses, households, and communities to gain a comprehensive understanding of economic conditions.
While models, data, and analysis are crucial, Daly argued that direct feedback provides invaluable insight into how people are planning for the future. By combining all available information, she concluded, the Fed can craft monetary policy that responds effectively to changes in the economic outlook and remains appropriate for the challenges ahead.
