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.