Fed’s Daly Says Policy Division Is Less Important Than FOMC Action

Summary

San Francisco Fed President Mary Daly discusses the Fed's decision to hold rates steady, the importance of FOMC action over statement wording, and the impact of oil price shocks and tariffs on inflation. She says it is too early to tell if the cutting cycle is over and stresses watching forward-looking data. Daly also comments on inflation expectations and the upcoming change in Fed leadership.

• Daly downplays dissent on forward guidance, emphasizing unanimous decision to hold rates.
• She says the real signal is the FOMC's action, not phrasing in the statement.
• Daly notes oil prices could fall to $75 if conflict ends quickly, but uncertainty remains.
• She argues short-term inflation expectations reflect current gas prices, not de-anchored expectations.
• Tariffs are being managed with refunds and pass-through splitting, but oil shock is new.
• Daly warns against overreacting to news, stresses patience and data dependence.
• She is open to studying balance sheet optimization and scenario-based communication.
• She looks forward to working with incoming Chair Kevin Warsh and discussing Fed communication.