Federal Reserve Bank of San Francisco President Mary Daly emphasized a cautious and patient approach to monetary policy late Wednesday, citing the resilience of the US economy and ongoing uncertainty surrounding the effects of President Donald Trump’s economic policies. Speaking to Bloomberg, Daly underscored that the Fed is well-positioned to wait for clearer signals before making any policy shifts.
Key Takeaways from Daly’s Remarks:
Policy Stance: “Monetary policy is well-positioned, moderately restrictive,” Daly said, signaling no immediate need for adjustments.
Economic Outlook: She noted that the current economic landscape—with solid growth, a strong labor market, and declining inflation—is aligned with the Fed’s goals.
Business Sentiment: While businesses remain cautious due to policy uncertainty, Daly pointed out they are not showing signs of a significant slowdown.
Flexibility in Response: “Fed policy can respond to whatever comes into the economy,” she added, reinforcing the Fed’s readiness to act if conditions change.
Market Conditions: Daly described loan demand as solid and credit conditions as healthy, indicating continued financial system stability.
On Forward Guidance: She cautioned against issuing forward policy guidance at this time, calling it “speculative and wrong” given the prevailing uncertainty.
“Patience is the word of the day,” Daly concluded, signaling that the Fed sees no urgency to alter its policy path without clearer data.
Market Reaction:
Following Daly’s comments, the US Dollar Index (DXY) edged down 0.07% to 100.99 at the time of writing, reflecting a modest dip in investor confidence in aggressive near-term Fed action. Traders are now awaiting upcoming inflation data and further central bank commentary for additional policy cues.
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